In late April, the Office of the Comptroller of the Currency (OCC) sent cease-and-desist orders (C&D) to two banks, citing them for BSA/AML deficiencies. In addition, the OCC fined one of the banks $60 million.
USAA Federal Savings Bank is alleged to have violated the Bank Secrecy Act and was issued the $60 million penalty. Before the OCC announcement, the Financial Crimes Enforcement Network (FinCEN) imposed an $80 million fine on the very same bank.
Anchorage Digital Bank, the first of its kind (crypto focused) to have received a federal charter, was also issued a C&D. Because of its federal charter, the bank must adhere to BSA/AML law, which the OCC says it has not. However, the order against Anchorage did not include revocation warnings.
“The OCC holds all nationally chartered banks to the same high standards, whether they engage in traditional or novel activities… When institutions fall short, we will take action and hold them accountable to ensure compliance with federal laws and regulations,” said Acting Comptroller of the Currency Michael J. Hsu.
Anchorage must establish a new AML protocol within 30 days. If it remains in non-compliance, it could face fines as well as charter revocation.
The “Five Pillars” of BSA/AML that must be adhered to are:
Pillar #1: Internal Controls
Institutions must set internal controls that are codified with policies and procedures to assist in employee awareness and knowledge about money laundering activities. These controls include:
Risk assessment processes to identify which products, customers, services, locations, and third parties are vulnerable to money laundering schemes.
Pillar #2: BSA/AML Compliance Officer
Institutions must have a point person or principal at the firm to oversee the entire BSA/AML program.
It’s the Compliance Officer’s job to initiate and arrange independent audits and make sure that the firm is 100% compliant.
Pillar #3: BSA/AML Training Program
The institution must train employees from top to bottom and keep them trained and updated on all matters regarding the BSA/AML.
The higher level of responsibility, the more rigid the training required. Everyone in the institution must always be aware of and compliant with BSA/AML.
Pillar #4: Independent Audits and Testing
Regular independent audits and testing of BSA/AML systems must occur.
External audits are necessary so that there’s objectivity in the evaluation of the internal control programs set.
Pillar #5: Customer Due Diligence (CDD)
Institutions are expected to perform appropriate due diligence on who their clients are, and they should understand what type of transactions clients are expected to perform.
Implementing risk based CDD policies helps employees and management identify account holders who are vulnerable to money-laundering.
Additionally, a suspicious activity report (SAR) is expected to be submitted if suspected money laundering occurs.
With USAA alone facing perhaps $140 million in fines for poor BSA/AML practices, and Anchorage looking at potential fines and possible charter loss, it may be time for banks (traditional and crypto) to institute a modern fraud detection and prevention system.
The solution is ToolCASE.
ToolCASE’s best-in-class, real-time, Ai technology helps to both ensure BSA/AML compliance, and detect/prevent fraud incursions of all kinds…
At financial institutions of all sizes.
As part of our campaign to modernize the financial services industry, our Ai solutions are designed to help institutions combat the threat of money laundering and remain BSA/AML compliant. In addition, our Ai helps detect and prevent financial frauds both internally and externally.
Don’t wait for fines to rack up, or C&D letters to arrive…
Get a demonstration of ToolCASE’s incredible technology, HERE
Or read more about USAA and Anchorage, HERE