Thursday, August 16, 2018


If you are the director of compliance at a financial institution, your organization may very well have to face one or more of the following circumstances:

(1) Your bank has become the subject of a regulatory action, which happened as the direct result of non-compliance wirh specific BSA/AML regulations.

(2) Your bank is undergoing a regulatory examination, or recently completed an examination.

(3) There is regulatory activity that indicates a heightened focus on a specific group of regulations in the industry.

(4) There have been a number of publicly-disclosed regulatory civil fines and penalties, which include mandatory look-backs and remediation.

Whether look-backs and remediation ordered by a regulatory authority, or initiated by your bank, in the light of ongoing industry or law enforcement developments, effective look-backs and remediation efforts, which review prior bank actions, for a specific extended period, are vital, as they will clean up your past compliance errors, and missed transactions.

To more effectively locate, and identify, prior issues, it is suggested that you avail yourself of facial recognition software, which can show you where your prior compliance efforts may have fallen short. You employ it to verify these customer identities:

(A) Run facial recognition software on your clients' government-issued photo identification documents on all new accounts opened during the look-back period.

(B) Run facial recognition software on all your clients who closed their accounts during the look-back period.

(C) Run the facial recognition software on all your clients that your investigation concludes may have had suspicious transactions.

The object is to absolutely confirm client identity, and to uncover, through the use of facial recognition software programs, those career criminals, OFAC SDNs, PEPs, and users of bogus passports whom your compliance staff failed to spot at account opening, or closing.

The identification of these criminal elements will show regulators that you are assessing the causes of your prior compliance breakdown, have analyzed the situation, and have positively identified your remediation approach, using improved technology, including but not limited to the use of facial recognition platforms, as part of Enhanced Due Diligence.

Although most compliance officers are familiar with the customary applications of facial recognition software, at account opening, to check counterparties, and to avoid sanctioned individuals, its use in look-backs illustrates that there are a large number of additional potential uses by compliance, which will result in a larger number of users, and eventually its universal deployment, as a required component of their Enhanced Due Diligence procedures.

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