Regulators plan meeting with law enforcement on banks’ AML burden

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WASHINGTON — The federal financial regulators will meet with law enforcement officials in an attempt to address banks' reporting burdens under anti-money-laundering laws, one top agency head said Wednesday.

Federal Deposit Insurance Corp. Chairman Jelena McWilliams said regulators are working with the Financial Crimes Enforcement Network to schedule the meeting, which she said will occur hopefully within a month. The purpose of the meeting, McWilliams said, is to understand what law enforcement and intelligence officials do with the millions of suspicious activity reports banks submit every year without much feedback.

Financial institutions have complained that the cumbersome reporting effort does not appear to result in an equal AML benefit.

“From our perspective, we would like to know" from law enforcement "what exactly are you doing, how are you looking at it and is there anything that you can do to maybe ... change how the information is submitted and relieve some of the burden while still providing useful” to law enforcement, McWilliams said during a speech at an event hosted by the Independent Community Bankers of America.

Since banks do not know how the information is handled, it seems like a "black hole" to them after submitting a SAR, she said. She added, however, that “there is a very good use for this information.”

“Once our banks submit all of these SARs and everything else ... how do you [law enforcement] analyze this information because you must get millions, if not billions, of pieces of information from all these different banks,” McWilliams said to reporters after the speech. “I don’t have a date yet, but ... I’m hoping the next month or so. We’ve been asking for this for some time from Fincen.”

The financial regulators have been meeting with Fincen for the past year to begin rolling out amendments to streamline the Bank Secrecy Act and AML rules that the industry has long argued are more burdensome than effective in catching criminal activity. These efforts included a joint statement issued in October encouraging community banks and credit unions to share resources with each other in order to comply with AML requirements, and clarifying which circumstances allow such sharing.

The statement was issued by Fincen, the FDIC, the Federal Reserve Board, the Office of the Comptroller of the Currency and the National Credit Union Administration.

Yet the prudential regulators are limited in their authority to deal with some of the larger AML-related issues, such as a congressional requirement that banks must submit SARs on transactions of $5,000 or more and currency transaction reports on transactions starting at $10,000. The thresholds have not been changed for decades and banks argue the amounts are too low, causing them to submit more paperwork than necessary. However, law enforcement has long supported having more data.

Congress has also been working on legislative packages to address the more cumbersome paperwork process at banks. For example, last year Reps. Blaine Luetkemeyer, R-Mo., and Steve Pearce, R-N.M., introduced a bill to raise the thresholds for CTRs and SARs, but it did not get needed support. Lawmakers are expected to try to advance an AML bill during this Congress.

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AML Jelena McWilliams OCC FDIC Federal Reserve FinCEN