WASHINGTON — Federal banking regulators Thursday issued a joint statement intended to improve the consistency of anti-money-laundering enforcement actions among the various oversight agencies.
In essence, the statement is an effort to bring clarity to the anti-money-laundering enforcement process, by issuing a single guidance document for banks that encompasses the expectations and views of the various banking regulators.
"We think it's important to be uniform and transparent about our policies, especially regarding enforcement of anti-money-laundering regulations," U.S. Federal Reserve Governor Randall Kroszner said in a statement.
"The purpose of the statement is to clarify what is expected of both the industry and examiners, thereby streamlining compliance and enhancing consistency of enforcement," the Fed governor added.
In the aftermath of the Sept. 11, 2001, terrorist attacks, financial regulators have been cracking down on banks that have lax or weak internal controls to guard against illicit finance.
But the banking industry complains that federal regulations are both complex and overly burdensome. Moreover, bankers say they have received mixed signals from regulators on how exactly they should guard against money-laundering.
"I think it's a good thing for banks to have a clear and consistent statement across the agencies about how they're going to use a very specific power," said Richard Riese, director of the American Bankers Association's Center for Regulatory Compliance.
"It's always important for banks to get the right message," added Riese, who noted today's statement was clearly "not a ratcheting up (of enforcement), but it's certainly not a winding down."
Thus, Thursday's announcement would appear to be an attempt to make the compliance process easier for banks.
"The statement, which reflects the agencies' current practices on enforcement with respect to (Bank Secrecy Act) compliance, describes the circumstances under which the agencies will issue a cease-and-desist order in compliance with these statutory provisions," the financial regulators said in a statement.
To wit, the document lays out the essential elements required of each bank's anti-money-laundering controls: Each bank must have "a system of controls to assure ongoing compliance with the BSA," "independent testing for BSA/AML compliance," and a designated individual responsible for coordinating and monitoring compliance.
The statement also describes in detail how banks can step afoul of anti-money-laundering laws. For example, a bank could have good anti-money-laundering training and independent testing but it would still be subject to a cease-and-desist order "if its system of internal controls (such as customer due diligence, procedures for monitoring suspicious activity, or an appropriate risk assessment) fails with respect to a high-risk area."
The latest statement follows the June introduction of an anti-money-laundering strategy by Treasury Secretary Henry Paulson aimed at reducing the paperwork burden for banks and improving law enforcement.
James H. Freis Jr., director of Treasury's Financial Crimes Enforcement Network, or Fincen, hailed the new over-arching guidance. "Today's statement by the agencies is another positive step with respect to clarity and consistency in the implementation of the Bank Secrecy Act," Freis said in a statement.
"It complements our joint efforts to make the BSA regulatory framework even more efficient for the regulated industries and still more effective for analytical and law-enforcement purposes," Freis added.
In a related matter, House Financial Services Committee Chairman Barney Frank, D-Mass., along with committee ranking member Spencer Bachus, R-Ala., asked the Government Accountability Office to produce a report on Fincen, and the rising number of filings under the Bank Secrecy Act.
The letter instructed the GAO to look particularly at Suspicious Activity Reports and Currency Transaction Reports.
The Office of the Comptroller of the Currency, the Fed, the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the National Credit Union Administration all signed off on Thursday's statement.
