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On April 6, 2023, the U.S. Department of the Treasury released a report examining vulnerabilities in decentralized finance (“DeFi”), including potential gaps in the United States’ anti-money laundering (“AML”) and countering the financing of terrorism (“CFT”) regulatory, supervisory, and enforcement regimes for DeFi.  The report concludes by making a series of recommendations, including the closing of “gaps” in the application of the Bank Secrecy Act (“BSA”) to the extent that certain DeFi services currently fall outside the scope of the BSA’s definition of a “financial institution” covered by the BSA. … Continue Reading

On July 13, 2022, the House of Representatives (the “House”) adopted an amendment to the 2023 National Defense Authorization Act (“NDAA”) offered by Maxine Waters (D. CA), inserting into the NDAA a version of the “Establishing New Authorities for Business Laundering and Enabling Risks to Security Act,” otherwise more commonly known as the ENABLERS Act. … Continue Reading

The Office of the Comptroller of the Currency entered into a Consent Order with Anchorage Digital Bank (“Anchorage”), which requires Anchorage to create a compliance committee and take steps to remediate alleged shortcomings with respect to the implementation and effectiveness of Anchorage’s Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) program.  Notably, Anchorage will pay no civil penalty.

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The topics discussed include the historic changes made by the AML Act at the beginning of 2021, including the Corporate Transparency Act (CTA); the proposed FinCEN rules to implement the CTA’s beneficial ownership reporting requirements; the CTA’s implications for financial institutions’ customer due diligence compliance obligations; FinCEN’s list of priorities for AML and countering the financing of terrorism; potential AML regulation of the real estate industry; and expectations for future BSA/AML regulation and enforcement concerning virtual currency and digital assets.… Continue Reading

Regulators Provide Greater Transparency into BSA/AML Enforcement Process.  On August 13, 2020, the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, and Office of the Comptroller of the Currency (the “Agency” or collectively the “Agencies”) issued a joint statement updating and clarifying their 2007 guidance regarding how they evaluate enforcement actions when financial institutions violate or fail to meet BSA/AML requirements. … Continue Reading

The COVID-19 pandemic has created a perfect storm for money laundering and fraud.  Financial institutions subject to the Bank Secrecy Act are facing increased incidents of fraud and must catch and report suspicious or illegal activity while juggling financial concerns and trying to work remotely.  The pandemic also will expose existing incidents of fraud—and investigations and litigation will surely ensue as investors and consumers demand their cash back, only to discover that the money is gone. … Continue Reading

In our examination of two recent OCC BSA/AML consent orders, one with a bank and another with an individual in-house professional, we review the OCC’s allegations underlying the orders and how the OCC focuses on the core pillars of BSA/AML compliance when choosing to pursue enforcement.  We also discuss the takeaways for boards and management of financial institutions when accepting higher-risk customers, including digital currency exchanges, and what the AML liability risk is for individuals – including how such risk can be minimized, and the inherent tension between the interests of institutions and their executives and compliance officers. … Continue Reading

AML/BSA compliance continues to be the focus of rigorous enforcement on both the federal and state levels.  In this episode, we look at the conduct for which financial institutions have been faulted in recent enforcement actions, flag other missteps that can trigger regulatory scrutiny, and offer practical tips for avoiding regulatory criticism and reducing enforcement risk.… Continue Reading