In 2017, both federal and state regulators stepped up anti-money laundering (AML) enforcement causing an increase in the pressure for financial institutions to ensure compliance especially with the implementation of customer due diligence rules. Some of the most recent enforcement actions include Citibank, who paid a $70 million fine for violating a 2012 order which dealt with the Bank Secrecy Act and AML faults, including the bank’s failure to file suspicious activity reports (SAR) and conduct due diligence on customer accounts.
Merrill Lynch also paid a fine of $26 million that was split between the Securities and Exchange Commision (SEC) and the Financial Industry Regulation Authority because they failed to detect and report suspicious activity involving billions of dollars in transactions. Bank of America’s AML system (Merrill’s parent company) failed to identify suspicious activities on high-risk customers as well.
One of the largest fines from 2017 was the Deutsche Bank fine of $425 million for “mirror trading” schemes that involved the laundering of $10 billion from Russia through the bank’s branches in Moscow, London and New York.
Regardless of the amount that these institutions were fined, there are noticeable similarities between each of them including a failure to implement and maintain an effective AML program and/or a failure to detect, deter and report suspicious transactions. The key to avoiding such violations and incurring millions of dollars in penalties would simply be to have an adequate compliance solution and program in place that includes due diligence procedures and training to help prevent and detect suspicious and illicit activities.
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