• Federal Deposit Insurance Corporation (FDIC)
• Board of Governors of the Federal Reserve System (Federal Reserve)
• National Credit Union Administration (NCUA)
• Office of the Comptroller of the Currency (OCC)
• Commodity Futures Trading Commission (CFTC)
• Securities and Exchange Commission (SEC)
• Internal Revenue Service (IRS)

Federal Functional Regulators and the IRS are responsible for examining financial institutions for compliance with the BSA/AML requirements. The Self-regulatory organizations (SRO) for the securities and futures industries (including the Financial Industry Regulatory Authority (FINRA) and the National Futures Association (NFA), also have BSA/AML responsibilities and conduct BSA examinations of their members. The Department of Justice (DOJ) can conduct investigations of financial institutions and individuals for both civil and criminal BSA/AML violations. DOJ prosecutes violations of federal criminal money laundering statutes and violations of the BSA, and typically several law enforcement agencies play a role in conducting BSA-related criminal investigations. There are hundreds of agencies, including federal, state, and local law enforcement, supervisory agencies, and state regulators that use BSA suspicious activity reports (SAR) and currency transaction reports (CTR) in their investigations or examinations.

Who does what?

The U.S. Government Accountability Office (GAO) 2019 Report on the BSA and how Agencies and Financial Institutions share information and metrics highlights roles and responsibilities such as:

• FinCEN, the banking regulators, and SEC may assess civil money penalties for BSA violations and take enforcement actions for noncompliance.
• SROs have established BSA-related rules or requirements for their members based on federal requirements and may take disciplinary actions against them for violations of these rules.
• IRS issues letters of noncompliance to institutions it oversees and relies on FinCEN for formal civil enforcement action.
• IRS-CI (Criminal Investigation) has the authority to investigate criminal violations.
• The DOJ Criminal Division, FBI, and ICEHSI (Immigration and Customs Enforcement Homeland security Investigations) can conduct criminal investigations of BSA violations.
• Law enforcement agencies and prosecutors may review and start investigations into a variety of criminal matters based on BSA reporting filed in their areas of jurisdiction.
• BSA recordkeeping and reporting requirements establish a financial trail for law enforcement investigators to follow as they track criminals, their activities, and their assets.
• DOJ prosecutes financial institutions and individuals for violations of federal criminal money laundering statutes.

Information Sharing leads to Convergence

The US Treasury and FinCEN have led efforts to identify BSA goals and priorities such as issuing a national strategy and risk assessments for combating criminal financing.  They have established key mechanisms for BSA/AML collaboration, such as interagency working groups, information-sharing agreements, Memorandums of Understanding, and liaison positions that encompass multiple federal, state, and local agencies and private-sector participants.  The coordination and communication among agencies responsible for oversight of BSA/AML requirements demonstrates that a Convergence is occurring.  This means that FATCA, AML/PLAFT, OFAC, FCPA and FinCEN regulations are being used in a unitary fashion.  The United States Treasury and the SEC have agreed to share resources and train investigators/regulators. The United States Department of Justice supervises all of it.

Does your Financial Institution allocate and finance the staffing and training to comply with these “interrelated laws”?

The interrelation is taking place as a result of the analysis capabilities of “Big Data” which technical capabilities and artificial intelligence provide. Financial Institutions can no longer afford to underfund hiring and training in each of these compliance areas.  Make sure you have enough resources budgeted and allocated.  Who is your Corporate Governance Expert?  ©