As the fight against money laundering and international crimes continues, increasingly stricter anti-money laundering (AML) regulations are being implemented, putting strain on professionals in the financial industry and financial institutions (FI’s).
The Office of the Comptroller of the Currency’s Bank Secrecy Act (BSA) has strict requirements for FI’s that include implementing a strong AML program, proper record keeping, and most importantly filing suspicious activity reports (SAR’s) whenever a suspicious transaction is detected. SAR’s have been deemed by US federal authorities as critical and effective in preventing money laundering, corruption and terrorism and are to be filed in the following instances:
- A criminal violation of any amount indicating insider abuse
- A criminal violation totaling $5,000 or more with a suspect.
- A criminal violation totaling $25,000 or more with or without a suspect.
- A transaction avoiding the BSA or regulations.
- A transaction indicating money laundering or other criminal activities.
- A transaction with no reasonable explanation to the customer, after the background of the customer and possible explanations are considered.
While SAR’s are a strong front to deterring financial crimes from occurring, its low threshold means FI’s are forced to file a large amount of unnecessary SAR’s, lowering the value of these reports to the authorities. Due to the high amount of SAR’s being filed, FI’s are also doubtful if they are being reviewed by authorities, including FinCEN officers and investigators. Filing SAR’s do not require immense compliance knowledge and skills and, as a result, a trend has started where compliance officers are turning away from the profession in general, believing their skills can be used elsewhere.
However, compliance officers may be catching a break as new legislation dubbed The Counter-Terrorism and Illicit Finance Act was presented to the House of Representatives and is looking to increase the threshold thus decreasing the number of SAR’s filed. In 2017 alone, the total number of SAR’s filed was a record 916,000. The Act calls the existing legislation outdated as it has remained unchanged since its last update in 1996, and states that it will “triple the dollar threshold for filing currency transaction reports to $30,000, and double it for suspicious activity reports to $10,000.” Representative Blaine Luetkemeyer, R-Mo, a sponsor for the Act stated “This legislation is the first step in making the AML regulatory regime work by modernizing the woefully outdated laws and streamlining regulations to increase its effectiveness.” If approved, the Act will lessen the burden on compliance officers and will require the Treasury Department to identify more reports that are needed, however will not change how FI’s identify and monitor for suspicious activity.
For the full article, click here.