US revises anti-money laundering manual

May 4, 2010

Bank regulators revised an anti-money laundering examination manual. But government watchdogs said financial regulators are still not doing enough outreach to local law enforcement agencies to aid in the battle against terrorist funding and drug smuggling, reports Thomson Reuters WG&L Accounting & Compliance Alert.
Bank regulators on April 29, 2010, issued the revised Bank Secrecy Act/Anti-Money Laundering (BSA/AML) examination manual.
The manual provides guidance to safeguard banks and other financial companies from money laundering and terrorist financing.
The last time it was updated was August 24, 2007.
The Federal Reserve System, the Federal Deposit Insurance Corp., the National Credit Union Administration, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the State Liaison Committee revised the manual in collaboration with the Financial Crimes Enforcement Network (FinCEN), the administrator of the Bank Secrecy Act (BSA), and the Treasury Department’s Office of Foreign Assets Control.
The manual can be found on the Federal Financial Institutions Examination Council website.
Separately, the Government Accountability Office looked into the efficacy of suspicious activity reports (SAR) that banks need to file to inform regulators of suspicious transactions. They determined that FinCEN needs to do a better job of developing its process to revise SAR forms.
Banks have long been concerned about the resources required to file SARs and the extent to which SARs are used.
From 2000 to 2008, total SAR filings increased from 163,000 to 732,000 per year, according to the GAO report released on April 28, 2010.
Automated monitoring systems that flag multiple indicators of suspicious activities increased the filings. Also, several public enforcement actions against a few banks prompted other banks to look more closely at clients and their accounts.
The USA Patriot Act, passed in response to the September 11 terrorist attacks, expanded the scope of SAR filings to include most nonbank financial companies.
After a 2006 revision of the SAR form that could not be used because of technology limitations, FinCEN in 2008 developed a new process making revisions intended to increase its collaboration with law enforcement groups. The agency said it is taking other steps to work with law enforcement agencies, but the GAO said it is too soon to determine whether the steps have been effective.
In a separate report also dated April 28, the congressional watchdog recommended that FinCEN step up its communication efforts about the data it gathers and how it analyzes it to better support law enforcement agencies in catching money launderers.
Some law enforcement agencies complained that FinCEN does not provide enough information about the types of analysis it does.

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