Financial Crimes Enforcement Network(FinCEN)

Institute of International Bankers

Annual Seminar on Regulatory Examination, Risk Management and Compliance Issues

October 29th & 30th

Office of Compliance - Mission

• Created in 2004, the Office’s mission is to:

• Support, and as appropriate, oversee the agencies and organizations that conduct Bank Secrecy Act examinations

• Better ensure industry compliance with the Bank Secrecy Act

Role of the Office of Compliance• Promote exam consistency by working with

other agencies to coordinate examination procedures and training

• Monitor and assess the compliance of specific financial institutions and across the U.S. financial system

• Analyze Bank Secrecy Act and examination information for potential referral to regulatory agencies

Information Sharing Agreements• FinCEN negotiates and signs

“Memorandum of Understanding” with agency to establish standards for information sharing

• “Two-way” sharing - Agreement specifies the type of information that:

– Agency will provide to FinCEN– FinCEN will provide to the agency

Case Assessment Process• Cases originate from referrals from MOU partners of

institutions with significant Bank Secrecy Act violations and deficiencies; through self-reporting (backfiling); and are internally-developed

• Cases are tracked, analyzed and reported utilizing a Case Management System

• For certain cases, the Office of Regulatory Analysis may assist the Office of Compliance by analyzing an institution’s Bank Secrecy Act data

Transfer to the Office of Enforcement

• Factors influencing the decision to transfer a case to the Office of Enforcement include but are not limited to:

• Significance of violations or deficiencies

– Number; pervasiveness; time-span; rate of failure

• Nature of violations

– Cause; repetitive; reflective of an AML program weakness

• Method of discovery

Transfer to the Office of Enforcement (cont.)

• Mitigating factors– Size; financial condition; staffing or turnover;

compliance record; good faith• Corrective action taken by institution

– Prompt; comprehensive; oversight by management and/or the board of directors

• Type of action being pursued by the primary regulator

• Law enforcement interest

Interagency Statement on Enforcement of Bank Secrecy Act/Anti-Money Laundering Requirements (July 2007)Positive step with regard to clarity and consistency in BSA implementation makes regulatory framework more efficient for regulated industries and more effective for law enforcementFinCEN Director Freis: “Myths about major penalties for minor lapses in BSA requirements should be dispelled.”

Bank Secrecy Act ComplianceInteragency Statement

Bank Secrecy Act ComplianceFinCEN Compliance Perspective• Civil money penalty enforcement actions are

pursued only in the most egregious cases: systemic, program-level breakdowns

• FinCEN has imposed only two civil money penalties in the last calendar year

• Vast majority of cases we review are handled in various manners by our Office of Compliance working with federal and state regulators

Bank Secrecy Act ComplianceEnforcement Goals

• Sanction egregious violations: Systemic non-compliance

• Compel corrective action

• Deter future non-compliance

Matching Risk-Based Examinations to Risk-Based Obligations

Money Services Businesses

Making Regulations More Clear

Feedback

Matching Risk-Based Examinations to Risk-Based Obligations

Money Services Businesses

Making Regulations More Clear

Feedback

Bank Secrecy ActEffectiveness & Efficiency

UPDATES

• SAR Sharing

• Cross-Border Reporting

FinCEN’s Web Site: Laws, Regulations, Advisories

Frequently Asked Questions

Interpretive Rulings

SAR Activity Reviews

National Money Laundering Strategy

Money Services Businesses www.msb.gov

Information and Guidancewww.fincen.gov

FinCEN’s Regulatory Helpline:

1-800-949-2732