One of the hottest—and hardest—topics in BSA/AML compliance is managing the risks due to third parties. Regulatory agencies including FinCEN, OFAC, and others have expanded the definition of “third party” to include any business relationship between a financial entity and another party, except a customer. This includes the subcontractors of your contractors or vendors.
At the same time, changes in the financial system have greatly expanded the kinds and frequencies of third party relationships. Financial institutions may now outsource or contract for entire departments or key banking functions that used to be entirely in-house. Globalization increases the number of these relationships that are international, with related parties in two or more countries, and may trigger the scrutiny of the (OFAC) in addition to the other regulatory agencies operating within the U.S. … Continue reading