The Treasury Department’s Financial Crimes Enforcement Network is stressing the importance of compliance and culture to ensure anti-money laundering efforts are successful. This week, FinCEN released a six-page compliance advisory to financial institutions and FinCEN Director Jennifer Shasky Calvery doubled down on that message during a speech before AML professionals in Washington D.C.
“Shortcomings identified in recent AML enforcement actions confirm that the culture of an organization is critical to its compliance,” FinCEN writes in its “Advisory to U.S. Financial Institutions on Promoting a Culture of Compliance.”
“Regardless of its size and business model, a financial institution with a poor culture of compliance is likely to have shortcomings in its BSA/AML program,” the advisory adds, detailing six steps institutions can take to “strengthen its BSA/AML compliance culture.” Those efforts include: ensuring that leadership actively supports and understands compliance efforts; that efforts to manage and mitigate BSA/AML deficiencies and risks are not compromised by revenue interests; that relevant information from the various departments within the organization is shared with compliance staff; that the institution devotes adequate resources to its compliance function; and the compliance program is effective by ensuring that it is tested by an independent and competent party; and its leadership and staff understand the purpose of its BSA/AML efforts and how its reporting is used.
Specific points raised in the advisory:
For a BSA/AML compliance program to be effective, it should have the demonstrable support of the leadership. The institution’s leaders should also receive periodic BSA/AML training that is tailored to their roles.
Compliance staff should be empowered with sufficient authority and autonomy to implement an institution’s AML program. An institution’s interest in revenue should not compromise efforts to effectively manage and mitigate BSA/AML deficiencies and risks, including submission of appropriate and accurate reports to FinCEN.
An effective governance structure should allow for the BSA/AML compliance function to work independently and to take any appropriate actions to address and mitigate any risks that may arise from an institution’s business line and to file any necessary reports, such as Suspicious Activity Reports.
A required element of any BSA/AML compliance program is the designation of an individual responsible for coordinating and monitoring day-to-day compliance with the BSA. The individual should be knowledgeable of the BSA and have sufficient authority to administer the program. For the program to be effective, the institution should devote appropriate support staff to its BSA/AML compliance program based on its risk profile.
Components of an effective BSA/AML compliance program include a proper ongoing risk assessment, sound risk-based customer due diligence, appropriate detection and reporting of suspicious activity and independent program testing.
Leadership and staff at all levels in a financial institution should understand that they are not simply generating reports for the sake of compliance, but rather recognize the purpose that BSA reports serve and how the information is used.
Speaking at the 2014 Mid-Atlantic AML Conference on Tuesday, Shasky said the compliance guidance can be viewed as a tool that compliance officers can use to garner board-level support for their efforts. “Based on the enforcement cases I have seen time and time again, both during my time as a prosecutor at the U.S. Department of Justice and now as Director of FinCEN, I can say without a doubt that a strong culture of compliance could have made all the difference,” she said. “If I were to find myself responsible for BSA/AML compliance within any financial institution, my first order of business would be to pay attention to these core, fundamental concepts. Because once you have a strong culture in place, including the support of your institution’s leadership, you have a firm foundation on which to build an effective program.”
No comments yet