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Tuesday, February 4, 2014

FinCEN chief urges AML compliance from MSBs

At the Securities Industry and Financial Markets Association Anti-Money Laundering and Financial Crimes Conference, Financial Crimes Enforcement (FinCEN) Director Jennifer Shasky Calvery reinforced the need for money service businesses (MSBs) to follow the anti-money laundering (AML) requirements of the Bank Secrecy Act.

"When a culture of compliance is lacking, the result is ineffective AML safeguards," Calvery said Jan. 30, 2014, in New York City. "A number of our recent enforcement actions have led us to begin thinking more broadly about how the culture of compliance impacts financial institutions, often with devastating consequences."

Calvery stressed the importance to MSBs, which include prepaid card providers, of electronically filing suspicious activity reports (SARs) with FinCEN when transactions are suspected of being fraudulent. She sited the failure of financial institutions to file SARs as lost opportunities to stop two notorious Ponzi schemes. "When JPMorgan failed to file a SAR with FinCEN, an opportunity to stop Mr. Madoff’s fraud was missed," she said. "When TD Bank failed to file timely SARs, a massive Ponzi scheme went undetected for 18 months. Sadly, these are cases where frauds went unheard, leaving law enforcement and regulators, including the SEC, in the dark. Critical pieces of the puzzles were left out, and innocent people continued to be victimized."

To connect those puzzle pieces of fraud, Calvery recommended industry-wide communication. "Information sharing within an organization is critically important, but sharing information between financial institutions is also critical," she said. end of article

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