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    Bank Secrecy Act and Anti-Money Laundering Regulations

    Congress has several laws in place to oversee financial institutions—protecting them against illegal activities such as money laundering and protecting consumers from unfair financial practices.

    There are various regulatory bodies that oversee these laws and work to ensure there are no violations. However, if a regulatory body determines a financial institution and/or its employee(s) has violated these laws, whether knowingly or unknowingly, they can potentially be fined for each violation.

    Violations can result in fines ranging from $5,000 to millions of dollars! Recently, a bank was fined a staggering $390 million for several violations of the Bank Secrecy Act.

    In this blog post, we’ll highlight some of the key provisions of the BSA and other anti-money laundering regulations.

    Bank Secrecy Act (BSA) and Anti-Money Laundering Regulations

    Al Capone is credited with coining the term “money laundering,” which is defined as “the concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses.”

    According to the Office of the Comptroller of the Currency (OCC), Under the Bank Secrecy Act (BSA) and related anti-money laundering laws, financial institutions must:

    • Establish effective BSA compliance programs
    • Establish effective customer due diligence systems and monitoring programs
    • Screen against Office of Foreign Assets Control (OFAC) and other government lists
    • Establish an effective suspicious activity monitoring and reporting process
    • Develop risk-based anti-money laundering programs

    To guard against suspicious activity, your institution should have processes in place to detect the signs of transaction laundering as early as possible. AML regulations and due diligence procedures are an excellent start. Here are some things to look for when you're trying to uncover unwanted activity:

    • Sum or volume of transactions that do not match the business typology
    • Due diligence findings that indicate a customer's involvement with unscrupulous business(es)
    • Unusual merchant codes used on the customer's sales slips

    Tips and Best Practices for Adhering to BSA and AML Regulations

    According to the FFIEC, suspicious activity monitoring and reporting are important internal compliance controls. Appropriate monitoring and reporting processes are essential to ensuring that financial institutions have an effective BSA compliance program.

    Appropriate policies, procedures, and processes should be implemented to monitor and help identify unusual activity. Your institution should take steps to ensure adequate staff is assigned to the identification, investigation, and reporting of suspicious activities.

    During the course of normal daily operations, employees may observe unusual or potentially suspicious transaction activity taking place. Your organization should incorporate appropriate training, policies, and procedures to ensure all employees adhere to the internal processes and best practices for identifying and reporting potentially suspicious activity.


    When keeping borrowers safe and protected is your number one goal, it’s scary to think the products you offer and market to them could potentially be harmful, and in turn, could cost you serious fines and penalties.

    That’s why education is so important when it comes to regulatory policies that aim to protect your institution and its borrowers. That’s also why swbcU has added 250 eLearning courses to provide your employees the education they need to protect your borrowers and your institution.

    Click here for the corporate training solution your business needs.

    Related Categories

    Regulations & Compliance

    Lisa Alvarez

    Lisa Alvarez is SVP of Regulatory Compliance at SWBC. In this role, she leads initiatives to measure risk culture and tolerances in an effort to develop and execute audit and advisory procedures focused on financial, regulatory, operational, as well as, internal control risks. Lisa is an experienced professional with an extensive career in business control development, compliance, and risk analysis within the finance, mortgage servicing and real estate industries. Prior to joining SWBC, Lisa served as a Vice President in the real estate finance group at Goldman Sachs Bank USA and as Vice President at Citigroup Inc., where she was responsible for the oversight of compliance and control programs within the global real estate lending division.

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