In CSI’s 2016 Banking Priorities Study, 46 percent of respondents listed Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) compliance as their biggest compliance-related challenge, ranking behind only mortgage compliance. But in this year’s study, respondents listed BSA/AML as their top compliance challenge.
The uptick in concern could stem from the regular discussions of AML compliance in the news. Recently, state legislators in Florida approved a bill that would expand money laundering law to include Bitcoin users, giving law enforcement officials more clarity in going after criminals who use virtual currency to engage in illegal activities. West Virginia also made similar strides recently with House Bill 2585, which would further define the role of “cryptocurrency” in money laundering offenses.
In April, AML professionals from around the world met in Hollywood, Florida, for the Association of Certified Anti-Money Laundering Specialists (ACAMS) 22nd Annual International AML and Financial Crime Conference. During the conference, ACAMS polled its members on various anti-money laundering and counter-terrorism financing topics.
Here are a few of the thought-provoking poll results that illustrate some of the challenges that AML professionals face:
Institutions Holding Cybercrime Meetings
Forty-eight percent of respondents said their financial institution established periodic meetings between AML, fraud and IT as a result of cybercrime threats.
With the amount of recent activity on the AML front, coupled with the constant battle that IT has to wage against fraud and other cybercrime, it is a good idea for financial institutions to be proactive and get their IT, AML and fraud representatives together for periodic meetings and discussions before cybercrimes occur.
These meetings could also help institutions prepare for the implementation of the Financial Crimes Enforcement Network’s (FinCEN) Customer Due Diligence (CDD) Rule, which goes into effect on May 11, 2018. According to the ACAMS poll, only 32 percent of respondents currently feel prepared for the implementation, and many are still working to meet the deadline.
If you feel a bit behind in your preparation, try focusing on updating your policies and procedures on beneficial ownership identification and verification. It will also help to identify any other data you deem necessary for creating a risk profile.
Risk Assessment Challenges
Fifty-eight percent of respondents said a regulator or internal audit challenged their methodology for conducting a sanctions risk assessment.
A solid risk assessment—one that helps avoid regulatory infractions and makes auditors happy—is crucial to the success of a BSA/AML program. A proper assessment should help break down the risks associated with all of your institution’s products, services, customers, subsidiaries, transactions and geographic areas. In addition, the risk assessment should include documentation on the development of appropriate internal controls. Make sure to review the risk assessment and internal controls regularly.
If you need help putting together a risk assessment, this ACAMS white paper contains outstanding guidance on building an AML risk assessment tool.
Multiple Screening Technologies
Seventy-three percent of respondents said they use two or more different technologies for automated screening processes.
Many organizations feature separate business lines that must adhere to their own rules, regulations and compliance requirements. Therefore, in order to be compliant in such a scenario, an organization would need to monitor multiple departments that use isolated business applications that encompass multiple customer and vendor datasets.
The margin for error increases when sanctions screening technology has to traverse multiple data sets and fractured records, and it goes up even more when an organization has to use multiple systems to conduct its automated screening. In order to avoid these compliance pitfalls, as well as to gain controls and suitable monitoring across the organization, businesses must combine their screening solutions into one centralized platform that greatly reduces an organization’s risk.
Staying Out of Trouble
It is difficult to estimate how much money is laundered in the U.S., but according to the Department of the Treasury, about $300 billion is generated annually in illicit proceeds. However, conducting regular meetings regarding cybercrime threats, completing reliable sanctions risk assessments and utilizing a centralized sanctions screening platform are three dependable ways to avoid becoming a statistic.
Rosalie Griebel serves as director of product management for CSI Regulatory Compliance Group. In her role, Rosalie oversees the strategic development of CSI’s various regulatory compliance solutions.