On Aug. 11, 2014, the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) issued FIN-2014-A007 (the "Advisory"). Among other things, the Advisory highlights the importance of maintaining a strong culture of Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) compliance for senior management, leadership and owners of all financial institutions1 – regardless of size or industry sector.
Citing shortcomings identified in recent AML enforcement actions, the Advisory restates certain general lessons gleaned from these actions that could be instructive to the leadership of all financial institutions required to comply with the BSA. In particular, the Advisory affirms that a financial institution (irrespective of its size and business model) can strengthen its BSA/AML compliance culture by ensuring all of the following:
Its leadership actively supports and understands compliance efforts.
Efforts to manage and mitigate BSA/AML deficiencies and risks are not compromised by revenue interests.
Relevant information from the various departments within the organization is shared with compliance staff to further BSA/AML efforts.
The institution devotes adequate resources to its compliance function.
The compliance program is effective by, among other things, ensuring that it is tested by an independent and competent party.
Leadership and staff understand the purpose of its BSA/AML efforts and how its reporting is used.
The Advisory expands on these principles by providing more in-depth, practical issues and examples on how to effectively accomplish these objectives. In light of the expanded principles, it is important for financial institutions to consider how to incorporate the guidance outlined in the Advisory in a manner that is commensurate with its risk profile and business model.
1 As defined in the BSA (31 U.S.C. §5312(a)(2)), the term "financial institution" includes banks, trust companies, U.S. agencies or branches of foreign banks, credit unions and thrift institutions; brokers or dealers in securities or commodities and investment companies; currency exchangers, issuers, redeemers, or cashiers of travelers checks, checks, money orders, or similar instruments; insurance companies; dealers in precious metals, stones, or jewels; pawnbrokers and loan or finance companies; money transmitters; and certain casinos or gaming establishment
To ensure compliance with Treasury Regulations (31 CFR Part 10, §10.35), we inform you that any tax advice contained in this correspondence was not intended or written by us to be used, and cannot be used by you or anyone else, for the purpose of avoiding penalties imposed by the Internal Revenue Code.