WASHINGTON — The Federal Reserve Board issued an enforcement action against State Street requiring the bank to beef up its anti-money-laundering and Bank Secrecy Act compliance measures within 60 days after finding the existing protocols were insufficient.

In a June 1 agreement, State Street agreed to submit a written plan to the Fed outlining how it would strengthen its BSA/AML risk management program across a number of relevant areas.

That plan must include specific measures to address funding "commensurate with the compliance risk profile of the organization," measures to improve information flow from the compliance office to the board of directors and procedures "to require the escalation of significant matters … to appropriate senior officers and the board of directors."

State Street must also increase the frequency and scope of its BSA/AML compliance risk assessments to include all business lines and clearly define acceptable risks for each and strengthen accountability of compliance personnel and internal controls and assessments.

The agreement also stipulates that the bank will submit a separate plan and timetable within 45 days for the "full installation, testing, and activation of an effective automated transaction monitoring system" that will "reasonably ensure the timely, accurate, and complete reporting … of all known or suspected violations of law" to appropriate authorities.

State Street must also enlist an approved third party within 30 days to review transaction activity at the bank from April 1, 2013, to June 30, 2013, in order to "determine whether suspicious activity … was properly identified and reported in accordance with applicable suspicious activity reporting regulations."

The Fed reserved its right to extend the deadlines in the agreement if it saw fit. State Street said in a June 1 statement that it is "committed to comprehensively addressing the regulators' concerns and meeting our compliance obligations."

State Street is not the only financial institution to be told to enhance its BSA/AML requirements. Discover Financial Services was the subject of a similar enforcement action on May 28, which required the firm to add additional personnel, surveillance systems and other resources to its compliance program.

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