FIBA’s 2014 AML Compliance Conference: Asking the Tough Questions

Compliance officers, regulators and other banking industry professionals recently gathered at the 2014 Florida International Bankers Association (FIBA) Anti-Money Laundering Conference to discuss “what’s new” in the anti-money laundering (AML) regulatory environment.

The conference began with a tribute to Clemente Vazquez-Bello, Esq. (1950-2013), who was instrumental in helping the industry shape the future of anti-money laundering policies and initiatives.   Having served as chairman of FIBA’s annual AML Compliance Conference since its inception in 2001, Vazquez-Bello was known for asking the regulatory agencies the “tough questions” on AML compliance. He would have been proud of the spirited and passionate discussion that occurred at this year’s conference.

The following are some key takeaways from FIBA’s 2014 AML Compliance Conference:

Beware of subject matter enthusiasts

While enthusiasm is encouraged, ensure that the individuals responsible for overseeing and implementing your AML program are properly trained on AML regulatory requirements and the financial institution’s own internal controls and procedures.  Training should include practical examples of money-laundering and other suspicious activities.

Trend in individual liability

Are we seeing a growing trend in sanctions against AML compliance officers?  Recent enforcement actions against compliance officers were a hot topic at the conference. Proposed anti-money laundering legislation (H.R. 3317) would allow the government to hold individuals – not just financial institutions – liable for violations of the Bank Secrecy Act (BSA).

The industry concern is that qualified professionals may not pursue compliance officer roles given an increased risk of individual liability and tough enforcement actions. Regulatory agencies emphasized that they do not want to push top talent away from compliance officer roles. They said the following key factors are often considered prior to taking action against an individual for AML compliance failures:

• What is the activity’s impact on the markets?
• Was the individual aware of the conduct?
• Was this an isolated incident or a systemic breakdown?
• Has the individual been cited in the past for similar conduct?

AML risk assessment: Don’t check your common sense at the door

Many of the recent regulatory actions against financial institutions contain provisions requiring improvements of AML and Office of Foreign Assets Control (OFAC) compliance programs.  In many of these actions, risk assessments did not adequately address the major AML risk areas of the firm.  Keeping the risk assessment simple but adequate to cover the risks at the firm and developing  standard procedures that can be used across the firm are critical.

Here are some additional considerations for your risk assessment:

• Use the risk assessment to drive the allocation of your compliance resources.
• An effective risk assessment can guide the AML program in developing appropriate controls/procedures and identifying areas for increased testing.
• Develop training that addresses the risks identified through the assessment.
• Continually update the assessment to reflect new guidance, businesses and industry regulatory trends.
• On a quarterly basis, present the board with any material changes to the program.

If you have questions about anti-money laundering compliance or other regulatory issues, please contact me or another member of our risk advisory services team.