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BSA/AML Hot topics: FinCEN publishes list of top threats to U.S. financial system

Upcoming Opportunities to Learn More

Join us at the next Central Ohio ACAMS Chapter event on August 12

The Central Ohio ACAMS Chapter was formed to serve financial crimes prevention professionals in the Central Ohio and surrounding areas, and our next event on August 12 will be a lunch-and-learn on the AMLA with speakers from Ernst and Young. You do not need to be a CAMS-certified professional to attend and get involved. RSVP here.

Train and remain BSA/OFAC compliant on October 28

Geared toward the more seasoned BSA/AML professional, we’ll get you up to speed on the most current industry news and information in just one hour during this live webinar with ProBank’s Mark Dever. Register here.

By Jennifer Morrison, VP, Senior Risk Manager

On June 30, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) published a list of eight crimes (referred to as “public priorities”) whose proceeds pose the greatest threat to the U.S. financial system as mandated by the Anti-money Laundering Act of 2020 (AMLA) enacted at the beginning of 2021.

These eight priorities, in no particular order, are the following:

  • Corruption
  • Cybercrime, including relevant cybersecurity and virtual currency considerations
  • Foreign and domestic terrorist financing
  • Fraud
  • Transnational criminal organization activity
  • Drug trafficking organization activity
  • Human trafficking and human smuggling
  • Proliferation financing

While FinCEN’s statement clarified that these priorities do not create a requirement to change current BSA/AML programs, a recent article in CUNA’s Compliance Blog noted that credit unions should begin to consider how they will incorporate the priorities into risk-based compliance programs. For example, assessing the potential related risks associated with the products and services offered, the members served, and the geographic areas in which they operate, are just a few important areas to consider.

Assessing your risks proactively

Although these priorities will not be included in the examination procedures until regulations on how to incorporate them are issued, there is no time to waste. It is time to be proactive and assess your credit union’s relevant risks. A well-publicized “failure” in any of these priorities should be considered as a risk to your institution as articulated by your Enterprise Risk Management program, even if it is a reputation risk.

Think about how your membership and community would view your credit union were it found holding a share account for a business that was a front company for a human trafficking operation. Or take an even more common example – if your organization was found engaging in skirting the local regulations concerning a marijuana business. And let’s not forget the many well-known, respected financial planners and lawyers who have been found to be involved in elder abuse over the years.

No credit union wants to be named in the news as holding the exploiters’ or victim’s account unless it was your credit union that alerted the authorities.

Improving your next Suspicious Activity Report

The priorities are also relevant for those who are filing your credit union’s suspicious activity reports (SARs). Law enforcement, especially at the federal and state levels, will have financial and manpower resources aligned with these priorities.

If you are filing a SAR concerning one of these priorities, take a look at your narrative. Law enforcement panels hosted by the Central Ohio ACAMS Chapter have often recommended putting the alleged crime in the very first sentence (or even the first word of the narrative) to catch the reader’s attention. So many financial institutions fill their first narrative paragraph with a bio of their institution but describing the crime in the first sentence or word will help the law enforcement reader to immediately direct the SAR to the right department or task force. Law enforcement does not have time to read the “About You” description of every SAR filer. They must read thousands of SARs, so cut to the chase, so to speak.

Cultivating your networks, educating your staff

Your BSA/AML and OFAC officer(s) should also make sure to cultivate a network of law enforcement agents they can contact whenever they file a significant SAR in a category covered by these priorities. Law enforcement wants you to call and tell them you just filed a Human Trafficking-related SAR, for example.

With the economy opening back up, remember that we will begin to see conventions and larger sports and entertainment gatherings; these are among the prime venues for human exploitation. Educate your staff on the typologies and attend these events with your eyes wide open. Learn more about the priorities and/or view FinCEN’s joint statement here.