continued from page 9 [SAR] and currency transaction report [CTR] reform, safe harbor for keeping suspicious accounts open, and increased FinCEN resources) are all critical for financial institutions to prepare for and understand. Other key components of the AMLA speak directly to a strong culture of compliance and should be addressed as soon as possible. Key AMLA Components for a strong culture of compliance Penalty Enhancements The AMLA has given federal law enforcement and financial regulators many new AML/CFT enforcement tools to take more aggressive enforcement action for egregious or systemic program issues, keeping in line with the new administration’s promises. These enhanced penalties confirm the continued importance of the FinCEN culture of compliance guidelines and should be stressed during your board of directors’ training. The language in the AMLA provides a new direction to financial institutions that they have adequate resources in technology and staff to appropriately address the FinCrime risk to the institution. This part of the AMLA is crucial to share now with your board and senior management to ensure they understand the consequences if it is not followed. Penalties Around Politically Exposed Persons Political corruption and kleptocracy are a growing concern globally and domestically alike. Politically Exposed Persons (PEPs) are high-profile individuals in a unique position to be entrusted with a prominent public function. PEPs pose a higher risk of money laundering or terror financing, using funds illicitly obtained through their position. The Financial Action Task Force (FATF) has issued extensive guidance in this area. Indeed, not all PEPs are criminals or kleptocrats, but financial institutions must perform ongoing monitoring on their higher-risk PEPs and understand the source of funds flowing through their financial institutions. The AMLA increases penalties around concealing a PEP’s source of funds, and the increased scrutiny is a direct indication that financial institutions should enhance policies and procedures around PEPs. Whistleblower Program Like the Dodd-Frank requirements, the AMLA establishes an enhanced whistleblower program strongly encouraging informants to step forward. This program also significantly expands rewards and safe harbor for those who step forward. Whistleblowers may be aware of fraud within an institution, corruption, systemic program deficiencies, or even a lack of strengthening programs as expected by regulators. A whistleblower could prevent severe regulatory penalties if issues are uncovered in time. What this will mean for an internal difference of opinion on SAR filing is yet to be seen. In any event, an addition of a whistleblower policy mirroring the AMLA should be part of an institution’s AML/BSA program in the future. It is more important than ever that financial institutions stay informed on the latest progress and understand the implications. From the board and executive management down, a strong culture of compliance is critical to an AML/CTF program’s success and avoiding regulatory scrutiny. coloradobankers.org 10
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