The Senate Banking Committee conducted a hearing
Thursday on Bank Secrecy Act supervision and compliance.
March 8, 2013 – Discussion at a Senate Banking Committee hearing Thursday underscored the importance of financial institution boards taking Bank Secrecy Act compliance seriously, especially as it relates to violations due to inadequate security protocols.
The hearing, which focused largely on the links between money laundering and terrorism, included discussion about the ultimate responsibility of those who work in senior positions at financial institutions in ensuring the correct protocols are followed. Sen. Jack Reid, D-R.I., expressed particular concern about top-level people at financial institutions being held responsible for shortcomings in these areas. He emphasized that a financial institution’s board needs to be involved.
The hearing also emphasized the limitations of current regulatory, compliance and enforcement efforts in preventing these crimes and enforcing adequate safeguards are in place to combat them.
David Cohen, Treasury’s under secretary for Terrorism and Financial Intelligence, said the recent string of high-profile enforcement actions against some of the largest, most sophisticated and best-resourced financial institutions “raises troubling questions” about the regulatory, compliance and enforcement efforts involved. He said it’s “critically important to understand why these failures occurred” and figure out what can be done to bolster efforts going forward.
The BSA and regulations promulgated by Treasury’s Financial Crimes Enforcement Network “can only do so much,” he said. Financial institutions need to have effective anti-money laundering and counter-terror finance programs in place, he said, “buttressed by strong enforcement efforts when those efforts fall short of the mark.”
Federal Reserve Board Gov. Jerome Powell said the majority of institutions supervised by the Fed have “well-administered and effective” BSA and Office of Foreign Assets Control compliance programs but said some cases have raised concerns.
NAFCU offers a number of resources to help credit unions better understand the BSA: