How effective are governments at detecting money laundering?
Criminals have long used money-laundering schemes to conceal or “clean” the source of fraudulently obtained or stolen funds. Money laundering poses significant risks to the safety and soundness of the U.S. financial industry. With the advent of terrorists who employ money-laundering techniques to fund their operations, the risk expands to encompass the safety and security of the nation. Through sound operations, banks play an important role in helping investigative and regulatory agencies identify money-laundering entities and take appropriate action.
Under the Bank Secrecy Act (BSA) and related anti-money laundering laws, banks must
- Establish effective BSA compliance programs
- Establish effective customer due diligence systems and monitoring programs
- Screen against Office of Foreign Assets Control (OFAC) and other government lists
- Establish an effective suspicious activity monitoring and reporting process
- Develop risk-based anti-money laundering programs
A financial institution is required to file a suspicious activity report no later than 30 calendar days after the date of initial detection of facts that may constitute a basis for filing a suspicious activity report. If no suspect was identified on the date of detection of the incident requiring the filing, a financial institution may delay filing a suspicious activity report for an additional 30 calendar days to identify a suspect. In no case shall reporting be delayed more than 60 calendar days after the date of initial detection of a reportable transaction.
Under the Bank Secrecy Act (BSA), financial institutions are required to assist U.S. government agencies in detecting and preventing money laundering, such as:
- Keep records of cash purchases of negotiable instruments,
- File reports of cash transactions exceeding $10,000 (daily aggregate amount), and
- Report suspicious activity that might signal criminal activity (e.g., money laundering, tax evasion)
Combating Money Laundering and Terrorist Financing
The OCC prescribes regulations, conducts supervisory activities and, when necessary, takes enforcement actions to ensure that national banks, federal savings associations, federal branches, and agencies of foreign banks have the necessary controls in place and provide the requisite notices to law enforcement to deter and detect money laundering, terrorist financing and other criminal acts and the misuse of our nation's financial institutions.
The OCC conducts regular examinations of national banks, federal savings associations, federal branches, and agencies of foreign banks in the U.S. to determine compliance with the BSA.
BSA and Related Regulations
The Bank Secrecy Act (BSA), 31 USC 5311 et seq establishes program, recordkeeping and reporting requirements for national banks, federal savings associations, federal branches and agencies of foreign banks. The OCC's implementing regulations are found at 12 CFR 21.11 and 12 CFR 21.21. The BSA was amended to incorporate the provisions of the USA PATRIOT Act which requires every bank to adopt a customer identification program as part of its BSA compliance program.
BSA Enforcement Policies
The OCC uses informal and formal enforcement actions to ensure national banks, federal savings associations, federal branches, and agencies of foreign banks compliance with BSA. Under a memorandum of understanding between the U.S. banking agencies and the U.S. Department of Treasury's Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) the OCC will promptly notify FinCEN and OFAC of significant BSA violations or deficiencies.
Law Enforcement Resources
In addition to utilizing information filed by banks in money laundering and terrorist financing investigations, U.S. law enforcement also provides banks with access to resources and tools such as those listed here that can be used to strengthen your BSA/AML risk management programs.
OCC AML Bulletins and FinCEN Advisories
The OCC and the U.S. Department of Treasury periodically issue alerts, advisories and rulemakings concerning institutions or individuals who may be engaged in fraudulent activities or be deemed to be of high-risk for money laundering or terrorist financing activities.
U.S. banks play a key role in combating the financing of terrorism by identifying and reporting potentially suspicious activity as required under the BSA. A number of resources are available to assist you in this effort.