Page 68 - ACAMS-Today-V20N3

[ REGULATORY INITIATIVES ]
The AMLA addresses the challenge of information sharing and coordination in four key areas. First, it requires FinCEN to give periodic feedback to designated BSA compliance officers in a cross-section of the reporting industry and discuss its observa- tions concerning trends in suspicious activity. The AMLA also requires FinCEN to disclose summaries to FIs periodically of SAR information that will prove useful to LEAs.6
A second provision establishes a “FinCEN Exchange” to facilitate voluntary public-private information sharing. Exchange members will include LEAs, national security agencies, FIs and FinCEN to promote innovation and technical advances in reporting. Third, the AMLA promotes sharing compliance resources by codifying 2018 interagency guidance for smaller firms by permitting collaborative arrangements, including instruction on best practices.7 Finally, the AMLA requires Treasury to convene a supervisory team of primary agency regulators, private sector experts in banking, as well as national security and law enforcement personnel to examine strategies to increase cooperation between the public and private sectors to counter illicit financing.8
Ensuring consistent and uniform compliance expectations
Another primary objective of the AMLA is to ensure that covered firms follow a uniform set of AML/CTF compliance expectations. This frontally addresses firms’ AML/CTF compliance risk arising from the U.S.’ fragmented supervisory structure that can lead to conflicting regulatory objectives. The top priorities of the BSA are to investigate and prosecute money laundering and its underlying criminal enterprises and to disrupt terrorism and its financing before terrorist acts touch U.S. soil.9 Even prior to the AMLA, FinCEN was folding this objective into the more dynamic and broader concept of “national security priorities,” which is cited throughout the AMLA’s provisions.10 In its guidance, FinCEN emphasizes that a company’s leadership and employees must understand that they are not simply generating reports for compliance’s sake.
The AMLA includes several provisions designed to ensure regulatory expectations
are centered on national strategic priorities
Conversely, banking agencies’ overriding concern is prudential safety and soundness. For example, bank supervisors may forbear taking BSA enforcement actions that may undermine the financial wellbeing of the banks subject to their supervision. Taking deposits, even from criminal enterprises, results in more net interest income and lending capacity. For their part, capital markets regulators can be expected to favor actions that promote fair and transparent business conduct and efficient financial markets ahead of law enforcement concerns.
The AMLA includes several provisions designed to ensure regulatory expectations are centered on national strategic priorities. First, to promote coordination and consistency of supervisory guidance from FinCEN, the primary federal agencies and state supervisors, the AMLA created a “domestic liaison office” with a team of liaison officers assigned to regions throughout the U.S. and whose head reports directly to the FinCEN director.11 The office will conduct outreach to BSA officers concerning actions by FinCEN that affect those firms and provide feedback from covered firms and agency examiners to FinCEN and the federal and state agencies.
Second, the AMLA establishes a framework for instructing primary federal regulators and state agencies on national strategic priorities.12 The Treasury Department will play a central role by publicly communicating these priorities and updating them every four years. For their part, covered firms must incorporate the priorities into their risk-based compliance programs.
A third provision provides for examiner training on FinCEN’s national strategic priorities.13 Federal examiners are required to attend annual trainings on potential national risk profiles, warning signs as well as federal crime patterns and trends. This training is designed to reinforce the mission underlying AML/CTF programs for LEAs and other national security agencies and what risks these programs seek to mitigate.
Modernizing AML/CTF rules and regulations
In addition, compliance risk and compliance costs arise from an obsolescent AML/CTF regulatory framework. An outmoded regime may not ensure outcomes consistent with national strategic priorities and may fail to establish a consistent and uniform set of compliance expectations for firms subject to the BSA.
The AMLA legislation adopted several measures to modernize this regime. First, Treasury must consult with relevant agencies and solicit public comment to identify regulations and agency guidance that may be outdated, redundant or otherwise do not promote risk-based AML/CTF regulation.14 A risk-based approach benefits firms by allowing them to allocate scarce corporate resources better.
68 [ JUNE–AUGUST 2021 ]