WASHINGTON - National-bank supervisors have broadened the criteria used to select institutions for intensive exams of their money-laundering programs, a representative of the Office of the Comptroller of the Currency said Tuesday.
National banks that do significant amounts of business in 15 countries recently identified by the Financial Action Task Force of Paris as unwilling or unable to enforce money-laundering laws face an increased likelihood of intensive regulatory scrutiny, OCC compliance specialist Thomas D. Fleming said at a conference sponsored by the American Bankers Association and the American Bar Association.
The list of noncooperative countries and territories includes the Cayman Islands, the Bahamas, St. Kitts and Nevis, St. Vincent and the Grenadines, and other Caribbean secrecy havens. Also named are a number of European and Middle Eastern countries, including Liechtenstein, Russia, Israel, and Lebanon.
Banks that offer private banking and trust services internationally will also be targeted. The OCC has 150 specially trained examiners doing "discovery reviews" to determine which banks will be selected for these intensive exams of money laundering controls.
John Byrne, general counsel of the bankers association, said that he was not surprised by the agency's move. It is consistent with recently revised anti-money-laundering guidelines and with advisory letters published in the past year, he said.
The OCC began targeted exams last year of institutions judged to be particularly vulnerable to money laundering because of their geographical locations, lines of business, and other factors.
The agency's district offices regularly submit lists of banks that warrant extra scrutiny, and about 10 per year are selected for an intensive examination. Mr. Fleming said that since the program was begun the agency has completed 17 targeted exams and is doing an 18th.
Broadening the criteria could make more banks subject to targeted exams, Mr. Fleming said. However, the number of exams done each year is not expected to increase.
Still, even banks that escape the special exams will be subject to more scrutiny, he said. "Even though this may only result in 10 targeted exams," the program encourages "examiners nationwide to institute expanded examination procedures."
The increased regulatory focus on prevention is intended to root out money laundering and make banks aware of the risks they face, Mr. Fleming said.
The OCC also said it plans to widen its enforcement net through the discovery reviews of banks that do business in the 15 noncooperative countries and territories named by the Paris-based task force.
"These will not be full-scope examinations," Mr. Fleming said. "They will be more to assess exposure and risk."
If a bank has significant exposure to any of the 15 countries on the list, the examiners will review its money-laundering control policies.
"If exposure is significant but the controls are appropriate, nothing will happen," he said. "But if controls are not sufficient, we may decide that we have to adjust our supervisory approach."
In some cases the discovery review may subject a bank to one of the agency's targeted examinations, he said.
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