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Anti-Money Laundering
Issue
Transforming anti-money laundering (AML) programs from expensive and ineffective procedures and paper chases into high value tools to fight financial crime and terrorist financing.
Position Statement
ABA recognizes the important role banks play in the fight against terrorist financing, money laundering, and other financial crimes. We support government efforts to track effectively illegal financial transactions by terrorists and criminals; nevertheless, banks should not be burdened—and law enforcement should not be distracted—by massive reporting of legitimate activity by law-abiding people. FinCEN and the federal banking regulators should administer the Bank Secrecy Act (BSA) by giving due deference to a bank's risk-based compliance judgments that guide the most productive use of AML resources.
Explanation
The BSA was designed to help law enforcement identify possible drug traffickers and money launderers. The USA Patriot Act, enacted in the aftermath of the September 11, 2001, terrorist attacks, amended the BSA and increased the account monitoring and reporting requirements on depository institutions. Today, the BSA is viewed as another important tool in the nation's fight against terrorist financing and criminal activities. As law enforcement increasingly looks to depository institutions to identify illicit activity, policymakers should reform the BSA in a manner that supports law enforcement while minimizing the regulatory burdens associated with financial crime detection, deterrence and reporting. To this end, ABA empanelled leading bank BSA experts to take a fresh look at the BSA system to develop recommendations about how to reform practices that impose burden without producing commensurate law enforcement value.
The ABA panel issued its report, A Framework for a New Partnership: Recommendations for BSA/AML Reform, setting forth five key recommendations: (1) create an independent BSA Gatekeeper to oversee and coordinate the BSA regime and to promote system integrity and efficiency; (2) take a priority-focused approach to compliance; (3) increase the quality of feedback and transparency; (4) streamline reporting and validate its utility; and (5) refrain from criminal sanctions that impose administrative compliance standards and redefine procedures for taking criminal actions against banks.
ABA supports several initiatives to improve the BSA/AML system:
- ABA applauds Treasury initiatives to work with financial institutions and regulators to develop options for improving BSA efficiency, particularly focusing on reducing burdens on community banks.
- ABA has been the lead association advocate for the "Seasoned Customer CTR Exemption Act."
- ABA has testified in favor of enabling money services businesses (MSBs) to self-certify their BSA compliance and continues to support a self-certification approach to relieve banks from overseeing an MSB's compliance program.
- ABA recommends several improvements in the suspicious activity report (SAR) process including: better communication of law enforcement priorities, results, and limits; more realistic threshold requirements for SAR filing; distribution of SARs to specialized teams that can better coordinate data and derive value; a limit to repetitive SAR filing for a customer's continuing activity; and more accountable tracking of outcomes associated with the use of SARs.
- Finally, ABA encourages consistent examiner training and implementation of the Interagency BSA/AML Examination Manual.
Contact for further information: Rob Rowe (202) 663-5029.
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