Kenneth Rijock

Kenneth Rijock

Tuesday, December 4, 2018

FINCEN AND OTHER REGULATORS' JOINT STATEMENT ENCOURAGES INNOVATION, WILL NOT PUNISH PARTICIPANTS WHO EXPOSE GAPS IN THEIR AML/CFT PROGRAMS


 The Financial Crimes Enforcement Network (FinCEN), together with the OCC, NCUA, FRS and FDIC, has issued what it refers to as a Joint Statement Encouraging Innovative Industry Approaches to AML Compliance.  The policy statement, which is supported by Treasury Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker, is intended to direct financial institutions into innovative programs for BSA/AML compliance, meaning that banks should adopt advances in compliance technology, to respond advances being utilized by money launderers and financial criminals.

One of the most important positions in the Joint Statement  is that "pilot programs that expose gaps in a BSA/AML compliance program will not necessarily result in supervisory action with respect to that program." In plain English: if you adopt advanced programs, such as AI, searches of Social Media, the use of cloud-based resources, the use of Facial Recognition Software systems, or Trade-based Money Laundering platforms, and you find a substantial number of money launderers already using your bank, you will not be punished by sanctions and penalties, if you report it to regulators. I get the impression that many compliance officers fear that new technology will find a huge number of working money launderers in their client base. Here, Treasury is assuring them that this will not occur.

Readers who wish to review the complete text of the Joint Statement may access it here.

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