Pub. 18 2021 Issue 4

14 THE REFORM AND MODERNIZATION OF BSA/AML By Julia Gutierrez, Director of Education, Compliance Alliance W ith technology changing and growing at what seems like the speed of light, banking laws and regulations can struggle to keep up. All too often, we skim across various regulations that revolve around paper transactions or technology that barely exists. One area of banking that can be especially impacted by the inability to keep up with the ever-changing world of technology or modernization is the Bank Secrecy Act (BSA). The BSA has been around since 1970 when Congress passed it as the first set of laws to combat money laundering in the United States. Except for the amendment to incorporate the provisions of the USA PATRIOT Act, there haven’t been many significant changes to the BSA until recent years. The BSA must be revised and revamped to meet the challenges and technological advances of the times to fulfill its purpose of fighting money laundering and financial crimes as effectively today as it did 50 years ago. Background Over the past several years, the Financial Crimes Enforcement Network (FinCEN) has placed a great deal of focus on reforming and modernizing the BSA. The objective began years earlier in 2010 when the Bank Secrecy Act Information Technology (IT) Modernization Program was developed to provide a modernized IT foundation to collect, store, safeguard, analyze and share data collected pursuant to the expectation of the BSA. Modernization remains a critical component of government efforts to ensure transparency among U.S. financial systems to detect and deter crime, strengthen national security, and achieve economic stability and growth. More recently, the call for modernization returns to the forefront as FinCEN sets out to “reexamine the BSA regulatory framework and the broader [Anti-Money Laundering] regime.” In 2019, the House Financial Services Committee issued proposed bills related to the Bank Secrecy Act and Anti-Money Laundering and Combating the Financing of Terrorism (CFT) laws. One of the proposed bills was set to reform the BSA/AML in an effort to strengthen and modernize the program by focusing on information sharing, resource sharing and technological innovation. Congress has also considered various proposals which could restructure and modernize the BSA/AML. The U.S. Department of Treasury issued its 2020 National Strategy for Combating Terrorist and Other Illicit Financing, which called for AML modernization by leveraging new technologies coupled with innovative compliance approaches.