What to Expect from AML and OFAC Enforcement in 2010
In the field of Anti-Money Laundering enforcement, 2010 will see new proposed Bank Secrecy Act (BSA) regulations requiring non-bank residential mortgage lenders and originators to have anti-money laundering programs and to report suspicious activity. These businesses need to be ready to implement these programs, because mortgage fraud, and scams involving home loan modification and foreclosure rescue businesses, are already key targets of criminal law enforcement.
The New Year will also bring the implementation of new BSA regulations governing Money Services Businesses (MSBs). These businesses include money transmitters, check cashers, currency exchangers, and issuers or redeemers of traveler’s checks, money orders or stored value. The most significant change here is likely to be that foreign money services businesses with no physical presence in the U.S. will become subject to U.S. regulations requiring recordkeeping and suspicious activity reporting if they use U.S. Banks or the internet to conduct financial operations in the U.S. When these rules come into play, they will be enforced. The best resolution will be to identify every foreign MSB you’re dealing with, and subject them to enhanced due diligence to ensure these foreign businesses are complying with U.S. law.
In addition, 2010 will see greater AML enforcement (in terms of civil and possibly criminal penalties) against financial institutions whose AML Programs are found by government agents to be “systemically deficient.” That’s government-speak for having a required AML Program, but not having procedures and controls to actually make it work effectively. The resolution is to look closely (and soon) at your last BSA test audit to make sure that all of the identified defects in the Program have been fixed. And if you haven’t done a test audit in the past 12 months, do it soon!
Finally, there will be greater focus on financial institutions’ compliance with the Office of Foreign Assets Control (OFAC) regulations. In particular, the various economic sanctions programs already in place against various countries, especially Iran and North Korea, will see not only more enforcement, but heavier fines for non-compliance. The resolution to greater enforcement of the OFAC rules will be to include OFAC compliance in your AML Program, and to make sure that your procedures clearly and effectively identify and control transactions in, with or to the sanctioned countries.
