WASHINGTON — An industry task force recommended Thursday the creation of a new government office to coordinate Bank Secrecy Act requirements and compliance.
The American Bankers Association task force, which includes some of the top anti-money-laundering bank officials in the country, said such an office should have more power than the Financial Crimes Enforcement Network.
The group said this "gatekeeper" office's primary responsibilities would include developing a national BSA policy, overseeing compliance and enforcement, issuing all BSA-related regulations, and facilitating cooperation with banks, banking regulators, and law enforcement agencies.
"You have so many regulatory entities that govern this that it's subject to interpretation, and it's almost governed differently at all levels. We wanted to get more consistency in the process," said Rick Maltz, the chief risk officer at Bangor Savings Bank in Maine and a member of the task force, the ABA's committee on BSA reform.
The committee includes two former directors of the Financial Crimes Enforcement Network: William Fox, senior vice president and global anti-laundering executive for Bank of America Corp., and Robert Werner, a managing director at Merrill Lynch & Co. Inc.
It also includes William Langford, senior vice president and director of global anti-laundering for JPMorgan Chase & Co. and a former top Fincen official, and Rick Small, head of anti-laundering for American Express Co. and a former top AML official at the Federal Reserve Board.
Until the housing crisis, anti-laundering compliance was a hot topic in the financial services industry since the Sept. 11 attacks. But the industry has complained that oversight has focused too much on whether banks report every single suspicious transactions and not enough on weeding out financial crime. The ABA group also said laundering policy, which is set jointly by the banking agencies, Fincen, and the Treasury Department, involves too many players with conflicting agendas.
The recommendation for a new BSA office came as part of a broader report calling for an overhaul of the anti-laundering system. The group also recommended giving banks more deference to design a BSA program that fits an institution's unique risks, better validation of the utility of BSA reporting, and avoiding law enforcement sanctions that end up imposing new compliance standards on the whole industry.
Wayne Abernathy, the ABA's executive vice president for financial institutions policy, who was involved in writing the report, said the new oversight body would shift the emphasis away from reporting and more toward implementing the most effective BSA policy.
The gatekeeper is viewed as part ombudsman for the industry and part coordinator of BSA policy.
Mr. Abernathy said the entity could be created either by strengthening Fincen's authority or by establishing a new office within the Treasury or the Federal Reserve, leaving Fincen free to operate as a data repository.
"Frankly, the point of the current system is to gather lots of data on law-abiding people and legal transactions. The point ought to be: Let's focus our resources on the crimes and the crooks," Mr. Abernathy said. "In order to that, you have to have an agency that knows that that is their duty. Their duty is not to make sure that reports are being collected. Their duty and job is to make sure that financial crime is being fought."
Yet Mr. Abernathy said the group did not want to define the oversight role too specifically. The report will be distributed to members of Congress and the new administration.
"We didn't want to put too fine a point on it, because we wanted to leave enough flexibility for Congress to figure out what to do," he said.
In a statement e-mailed to American Banker, Fincen Director James H. Freis Jr. defended the current role of the agency, a bureau within the Treasury.
"The report details many points of common ground on which Fincen staff and our industry partners have already been working," Mr. Freis said. "There are invaluable synergies that come from Fincen's position within the Treasury Department at the intersection of the regulators, law enforcement, and all the sectors of the financial industry."