If you’ve been paying attention, crypto/virtual currency has been coming up more and more. Not only are financial institutions starting to see their customers take part in this but banks will also likely be faced with whether they want to get involved in crypto-asset activities in the future. Is your BSA/AML program ready?
On February 8th, the Department of Justice announced the arrest of a New York couple for conspiring to launder stolen cryptocurrency. Over $3.6 billion in cryptocurrency was seized in what was the DOJs largest ever financial seizure. While the details of this scheme are quite complex, our “crypto guy”, Consultant Kevin Edwards, summarized it quite nicely during our recent webinar, “BSA/AML: Crypto/Virtual Currency”. Check it out:
Tellers and Customer Service Representatives play a crucial role when it comes to developing a customer’s risk profile. They are on the frontline working directly with the customer which gives them the ability to ask questions. Knowing what to ask and when are vital to your BSA/AML program.
The idea behind having a BSA Risk Assessment is to break down your bank’s BSA/AML risks into smaller, more manageable parts. There is no specific methodology which means that each bank’s risk assessment can, and likely will, look different. No two banks are the same. The BSA Officer and your BSA Team play a crucial role in developing and updating your risk assessment.
Crypto/Virtual currency is growing by leaps and bounds and is becoming more prevalent and mainstream. If you haven’t seen it pop up yet at your institution, it’s probably only a matter of time. If you haven’t conducted a risk assessment from a BSA/AML perspective, it’s something you are going to want to do. Management needs to be aware of the potential risks as well as how to mitigate those risks as you move forward.
Crypto Lingo Crash Course: Exchanges and Miners and Tumblers, Oh My!
Understanding and Assessing the Risks
Updating Your BSA/AML Program
Customer Due Diligence: What Questions Should You Be Asking?
Ongoing Customer Due Diligence and Updating the Customer Risk Profile
Enhanced Customer Due Diligence
Is This Crypto Business A Money Service Business?
Red Flags for Virtual Currency Abuse and Spotting Unusual Activity
Designed forBSA/AML officers, teams, management, compliance officers, auditors, and other risk management personnel.
(1.25 Continuing Education credit hours)
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NO CHARGE FOR ADDITIONAL LOCATIONS!
FinCEN Issues NPRM for SAR Pilot Program
On January 24, 2022, FinCEN issued a Notice of Proposed Rule Making (NPRM) regarding the establishment of a pilot program for financial institutions to share Suspicious Activity Reports (SARs) and related information with foreign branches, subsidiaries, and affiliates. This is required by Section 6212(a) of the Anti-Money Laundering Act of 2020. The NPRM outlines several limitations and standards for such sharing. Comments are due by March 28, 2022.
As you are likely already aware, institutions are generally prohibited from disclosing information contained within a SAR and/or even revealing the existence of a SAR. In 2006, guidance was issued on sharing SARs with head offices and controlling companies along with additional guidance for the securities industry and mutual funds. Again in 2010, there was guidance for depository institutions on sharing SARs with certain U.S. affiliates that are also subject to SAR filing obligations. Any sharing under these present rules requires sufficient internal controls to protect the confidentiality of the SARs. Since the pilot program is related to sharing information with foreign branches and subsidiaries, it brings with it additional concerns that are addressed in the NPRM.
The pilot program would only be temporary but it’s intended to determine whether and how to propose future long-term legislation. In order to participate in the program, a financial institution would need to submit an application identifying, among other things, the purpose(s) for sharing the information and how unauthorized disclosure will be prevented. Participants would also have a quarterly reporting requirement. The NPRM includes a detailed application process with rules and limitations for participants.
Again, comments are due by March 28, 2022, and may be submitted at:
Federal E-rulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Refer to Docket Number FINCEN-2022-0002 and RIN 1506-AB51.