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Reforming the BSA/AML

The Role of Banks in an Efficient and Effective Anti-Money Laundering Program

ABA 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 acknowledging 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 conducting full investigations before submitting reports.

The BSA initially 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. Today, the BSA is 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. Current requirements for banks to investigate and analyze suspicious transactions and the detail required delays the transmission of information to law enforcement, possibly impeding criminal investigations. To expedite the process, streamlined and simplified reporting would be appropriate.

To identify appropriate reforms, ABA empaneled 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 New Framework for 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. These recommendations, developed in 2008, are still valid today.

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 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.

The BSA initially 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. Today, the BSA is 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. Current requirements for banks to investigate and analyze suspicious transactions and the detail required delays the transmission of information to law enforcement, possibly impeding criminal investigations. To expedite the process, streamlined and simplified reporting would be appropriate.

To identify appropriate reforms, ABA empaneled 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 New Framework for 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. These recommendations, developed in 2008, are still valid today.

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 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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