Anti-Money Laundering

Ensuring limited resources are used effectively and efficiently to detect and deter financial crime and terrorist financing by transforming anti-money laundering (AML) programs from expensive and ineffective procedures into high value tools for law enforcement.

ABA's Position

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 illegal financial transactions by terrorists and criminals effectively; nevertheless, banks should not be burdened—and law enforcement should not be distracted—by massive reporting of legitimate activity by law-abiding people. FinCEN, the federal banking regulators and law enforcement should administer the Bank Secrecy Act (BSA) by giving due deference to a bank's risk-based compliance judgments in order to make the most productive use of AML resources.  Banks should report possible suspicious transactions to appropriate authorities but should not be expected to be deputized law enforcement agents and should not serve as detective, prosecutor, judge and jury when evaluating unusual or suspicious transactions.

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 September 11, 2001, amended the BSA by greatly expanding the account monitoring and reporting by depository institutions. Today, the BSA is viewed as an important tool in the nation's fight against terrorist financing and criminal activities. As law enforcement increasingly relies on depository institutions to identify illicit activity, policymakers should reform the BSA to support law enforcement while minimizing unnecessary regulatory burdens. 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, which sets 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 is very concerned that recent efforts designed to streamline information reporting actually require financial institutions to do more than monitor for suspicious transactions.  Instead, proposed steps would have the effect of deputizing banks to investigate and determine what specific criminal activity or crime has been committed.  This goes far beyond the original foundation of AML that when a bank detects a transaction that cannot be rationally explained, it should notify appropriate authorities and let law enforcement to do its job.  While banks should not turn a blind eye, banks should not act as law enforcement agents. These same goals are consistent with efforts underway, notably the Delta Team at FinCEN, to provide information law enforcement needs to investigate and prosecute crime while eliminating unnecessary and needless regulatory requirements, steps that ABA fully supports.

ABA supports initiatives designed to improve the BSA/AML system:

  • ABA applauds Treasury initiatives to work with financial institutions and regulators to improve BSA efficiency, particularly reducing burdens on community banks.
  • ABA supports efforts to streamline the process and facilitate communication between financial institutions and from law enforcement to financial institutions to detect and report suspicious activities.
  • ABA has been the lead advocate for the "Seasoned Customer CTR Exemption Act."
  • ABA supports allowing money services businesses (MSBs) to self-certify their BSA compliance to relieve banks from overseeing MSB compliance programs.
  • ABA recommends improvements to 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.
  • ABA encourages timely updates and consistent examiner training and implementation of the Interagency BSA/AML Examination Manual.
 

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Questions? Please contact Rob Rowe at (202) 663-5029 for more information.

 

 ABA Staff Contact

 
  • ​Rob Rowe, Vice President and Associate Chief Counsel, Regulatory Compliance
 

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