Criminals help identify BSA violators


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Enforcement of the Bank Secrecy Act (BSA) is getting a boost—this time from criminals, according to a new report from Reuters. In a relatively new enforcement strategy, U.S. prosecutors are focusing new energy on interviewing criminals about the banking relationships that support their criminal activity. Lighter sentences and better deals are an enticing carrot, according to the story.

The Justice Department’s Money Laundering and Bank Integrity Unit (the MLBIU), which is only a few years old, is driving this push to prosecute banks that fail to conduct KYC (CDD) and apply their AML and KYC (CDD) solutions assiduously to the on-boarding and transaction monitoring of customers.

According to Reuters reporter Brett Wolf, the MLBIU resources include a dozen prosecutors who are focusing specifically on tracking down financial institutions that decline to vigorously attend to the anti-money laundering and counter-terrorist financing provisions of the BSA such as know-your-customer research, reporting of large cash transactions, and the related risk analysis.

According to Jonathan Lopez, former deputy chief of the MLBIU, investigators are extending their interviews with criminals well beyond drug traffickers to look at the full range of profit-based criminal activity and are using these criminal sources to trace the money back to the banks and various types of financial institutions that are not adhering to BSA requirements.

The creation and resource-allocation to the MLBIU is seen as a boon to enforcement efforts that have often lagged due to the limited number of examiners in comparison to the number of financial institutions. Moreover, tips provided by criminals have helped prosecutors zero in quickly on specific behaviors with specific accounts at specific financial institutions.

This renewed focus on enforcing BSA requirements and the strategy to trace accounts backward from information-providing criminals should motivate institutions to review their KYC (CDD) solutions and transaction monitoring, according to AML Partners CEO Frank Cummings.

“This ratchets up the importance of KYC CDD, transaction monitoring, and overall AML Compliance,” Cummings said. “Having investigators focus on information provided by criminal informants enables the MLBIU to bypass fishing expeditions and instead zero in on specific actions by specific institutions. This exposes institutions to much greater risk and penalties from inadequate KYC CDD and transaction monitoring.”