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Federal Agencies to Share BSA/AML Resources for Regulatory Efficiencies

In a leap forward for efficiency and transparency in compliance regulation, the Federal Reserve System issued an inter-agency statement October 3, outlining how several federal agencies will now share Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) resources. The news was divulged during a regulatory panel discussion at the 17th Annual ACAMS Conference in Las Vegas this week.

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) collectively signed the statement.

Suzanne Williams, Deputy Associate Director for Corporate Governance, Supervision and Regulation Division, Board of Governors of the Federal Reserve System, told attendees, “We have an opportunity … to improve efficiency and transparency of regulatory processes. Efficiency and regulation and supervision can be improved by better calibration of risks such as money laundering.”

The Goals of New BSA and AML Resource Collaboration

Williams characterized the collaboration as part of an overall goal to increase transparency and make regulations simpler to understand, so that financial institutions can comply with myriad regulations. “You have a right to know what standards your banks will be judged against,” she explained, alluding to the challenges many compliance executives have faced in needing to comb through examination manuals that can be several hundred pages long. “Simplicity helps promote compliance in the financial industry,” she said.

Williams said current standards are “outdated and systems for law enforcement are not effective,” adding that this latest announcement is a way to share resources, lessen burdens, and increase efficiency.

“It’s a move in the right direction and potentially could be good news for our financial institution customers,” said Thomas Cosgrove, Global Head of Strategy, Supply and Compliance at Dun & Bradstreet, commenting on the news. “Our customers often talk about resource constraints and training challenges. If the bank agencies can alleviate some of that burden, I would think financial institutions would welcome it.”

However, Cosgrove cautioned that shared information still needs to be vetted properly and suggested current available technology should be leveraged to handle these processes where appropriate.

One banking industry professional who attended the show said while the government agencies have gotten better, “It’s still not there. A lot more has to be done.” She also recommended that bank agencies need to incorporate technology and data-driven insights. “That’s how you’ll find patterns in the information,” she stated. “They should be data mining and putting two and two together.”

Another attendee, also from the banking industry, had a more skeptical take. “I’ll believe it when I see it,” he said, adding that, in his opinion, federal agencies have a lot of catching up to do.

Greatest Challenges Complying With AML

This agencies’ announcement also aligned well with audience sentiment on its biggest challenges concerning AML regulation. ACAMS conducted a live poll of the compliance audience at the beginning of the session, asking 1,000+ attendees to cite their greatest AML challenges. The top answer, “resource allocation,” garnered more than one-third (35%) of the audience’s vote, while “information sharing” was cited by 22 percent of the audience that participated.

Live Poll Results

What is biggest challenge for the AML community?

Resource allocation 35%
Corporate culture 23%
Information sharing 22%
Effective training 10%
Examination success 9%

 

Representatives from FDIC, FinCEN, and OCC, who were also on the panel, agreed that each of their agencies are focused on working together to improve processes and transparency.

Benefits of Sharing BSA and AML Resources

“We want to reduce unnecessary burden from BSA/AML compliance” and increase effectiveness of anti-corruption efforts, said Spencer W. Doak, Director for BSA/AML Policy at OCC.

It’s a move in the right direction and potentially could be good news for our financial institution customers.
Thomas Cosgrove, Dun & Bradstreet
 

The agencies’ statement described potential benefits to sharing “human, technology, or other resources in a collaborative arrangement with one or more other banks,” such as lower costs and access to specialized expertise that might be difficult to acquire without collaboration.

 

Results of AML Reform Live Poll

In a second live audience poll during the session, when asked what area of AML reform should be prioritized, attendees again signaled that government banking agencies have clearly been listening to financial institutions and are working toward alignment and greater collaboration. One-third (33%) cited “regulatory expectations” as the one area of AML reform they thought should be a priority.

Live Poll Results

What area of AML reform should be a priority?

Regulatory expectations 33%
Tech and innovation 31%
Information sharing 20%
CTR reporting 9%
SAR reporting 7%

 

Williams told attendees there will be further developments in the coming months that will align with the goals of achieving greater efficiency, effectiveness, and transparency. “There’s more to come,” she concluded. “We’re trying to make sure we’re continuing to focus on what’s important and stop doing what’s not effective.”

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