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Because failure to comply with the legal obligations imposed by the Bank Secrecy Act (BSA) can subject national banks or other financial institutions to significant penalties and considerable hardship, it is paramount for executives at these companies to understand how the law is enforced by the Office. of the Comptroller of the Currency (OCC). Even a basic idea of how this federal agency uses the BSA to stop money laundering by regulating financial institutions can give the executives of those institutions the tools they need to protect their companies from legal liability.
Dr. Nick Oberheiden is an anti-money laundering attorney at the national corporate compliance law firm Oberheiden PC Here, he summarizes what he believes are the most important things for financial executives to know about how the Office of the Comptroller of the Currency (OCC) enforces essential provisions of the BSA.
Multiple Federal Agencies Enforce the BSA
When it comes to financial crimes, it is extremely common to see multiple federal law enforcement agencies teaming up to investigate and prosecute potential misconduct. This is also the case for money laundering and the BSA, which is generally enforced by the following agencies:
At the FBI, these investigations are handled by the Money Laundering, Forfeiture, and Bank Fraud Unit (MLFBU). At the DOJ, these cases are generally handled by the Money Laundering and Asset Recovery Section (MLARS), which itself consists of seven different units:
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Bank Integrity Unit
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International Unit
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Money Laundering and Forfeiture Unit
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Political Unit
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Program Management and Training Unit
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Program Operating Unit
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Special Financial Research Unit
However, these law enforcement agencies generally only step in when there is a money laundering case to deal with. From the perspective of a bank or financial institution, you are much more likely to have to deal with the regulators who are working to ensure that your company meets its legal obligations under the BSA. While this also falls under the purview of FinCEN, the OCC also plays a significant role in the enforcement mechanism.
Both the OCC and FinCEN are offices of the US Department of the Treasury. But while FinCEN focuses on detecting and investigating financial crimes, the OCC keeps its eyes more focused on the financial institutions whose systems can be abused by money launderers.
In enforcing the Bank Secrecy Act, the OCC suggests regulations to promulgate, monitors financial institutions in their compliance efforts, and takes OCC enforcement actions against institutions that fail to uphold their legal obligations under the BSA.
Basically, the OCC’s role is to ensure that financial institutions, such as national banks, federal savings associations, and federal branches or agencies of foreign banking organizations, comply with the BSA so that money laundering through them is more difficult. FinCEN’s role is to detect money laundering and then act on it.
The OCC and BSA Examinations
One of the main ways that the OCC enforces the Bank Secrecy Act is to conduct regular examinations of covered financial institutions to see how well they are meeting the obligations of the law.
Because the goal is compliance, the OCC is very upfront about what it wants from banks, credit unions and other financial institutions. It provides many guidelines, bulletins and walkthroughs that are designed to help institutions achieve a state of compliance in order for them to pass their examination. It even posts detailed descriptions of the screening procedure, as well as a handbook that outlines what is required and expected of financial institutions across the country.
Similar to an audit by the federal government, a BSA examination examines a financial institution’s anti-money laundering policies to see if they are consistent with the requirements under the Bank Secrecy Act. Financial institutions that fail the audit may be fined or face sanctions requirements that they comply by a certain date.
While most institutions will be subject to a “core examination” by OCC examiners, some will face a more arduous “expanded examination.” These are generally reserved for banks and other financial institutions that are not based in the United States or that handle certain financial transactions that are more complex or prone to money laundering.
Taking Compliance Obligations Seriously Can Avoid Enforcement Actions
If your financial institution took its Bank Secrecy Act compliance protocols seriously in drafting and implementation, then it should not face enforcement action from BSA FinCEN or OCC for failing an examination. However, there are times when this is not the case.
It is important to remember that the BSA requires financial institutions to conduct risk assessments to ascertain which business practices are most likely to lead to customers laundering their money, and then to take appropriate precautions to prevent this. But what precautions are “appropriate”? And when is a business practice sufficiently “risky” that it requires additional attention?
Reasonable minds could disagree on these matters. When you make a decision and the OCC disagrees with you, your financial institution may face consequences even though you did everything you could to avoid them.
Dr. Nick Oberheiden is an OCC enforcement defense attorney and founding partner of Oberheiden PC He has helped many financial institutions navigate the complex field of BSA compliance. He has also defended other institutional clients who have faced allegations of noncompliance and who have faced BSA enforcement actions by the OCC. One of the things he often tells his clients is, “There is no substitute for effective and experienced legal counsel at every stage in the BSA compliance process – from creating the compliance protocol at the financial institution to implementing it to ensuring it works through internal audit to handling allegations that your company does not support their company. legal obligations. These are highly technical compliance protocols. Worse, they are based on laws and regulations that could easily be interpreted differently by different people or parties. An attorney who is experienced in BSA compliance and executive actions and who has helped previous clients through the same situation you are in is a huge asset to have.”
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