The remarks made at this month’s conference of the Association of Certified Anti-Money Laundering Specialists were summarized by the Wall Street Journal’s Risk and Compliance Journal. Speakers noted the stricter internal control procedures being employed and the adoption of “know your customer” expectations. Those improvements, however, came with a warning. As larger institutions implement tighter anti-money laundering (“AML”) procedures, money launderers have turned to community banks and credit unions to conduct their transactions.
Separately, the Risk and Compliance Journal discussed how regulators use suspicious activity reports (“SAR”) and other AML data. Current and former FBI officials said that the suspicious activity reports filed by firms do not disappear into a “black hole.” Although it may take years for a given report’s significance to appear, the data the reports contain apply to almost every FBI investigation. SARs.
The Director of the Financial Crimes Enforcement Agency (“FinCEN”), Jennifer Shasky Calvery, spoke at another recent AML conference, the Mexican Bankers Association AML/CFT Seminar. Calvery discussed how FinCEN and Mexico are working together to disrupt the finances of transnational organized crime, including those organizations engaged in drug trafficking, human trafficking and smuggling. Among the activities being monitored are funnel accounts and trade-based money laundering (“TBML”), where an individual or business account in one geographic area receives multiple cash deposits, often in amounts below the cash reporting threshold, and from which the funds are quickly withdrawn in a different geographic area. A May 28, 2014 FinCEN Advisory describes how banks can spot funnel accounts and TBML. Calvery Remarks.
Calvery also discussed FinCEN’s October 2, 2014 Geographic Targeting Order (“GTO”) which requires enhanced AML recordkeeping and reporting for several classes of businesses in the Los Angeles Fashion District. The GTO further supports a recent law enforcement operation in Los
Angeles in which 1,000 federal, state, and local law enforcement officials conducted a takedown at locations across the Fashion District. Law enforcement authorities executed dozens of search and arrest warrants on businesses suspected of using “Black Market Peso Exchange” schemes to launder narcotics proceeds for drug trafficking organizations. During the operation, agents seized more than $90 million in currency found in various residences and businesses, stored in file boxes, duffel bags, backpacks, and even the trunk of a Bentley.
In a speech given last August, Calvery discussed how to implement a risk-based approach to AML and the importance of a culture of compliance. Corporate Counsel expanded on Calvery’s remarks, noting the six principles for a culture of compliance: engage leadership; resist compromising compliance with revenue interests; share information throughout the organization; provide adequate human and technological resources; test compliance; and understand the Bank Secrecy reporting process.