WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) has imposed more than $600 million in fines for anti-money laundering violations in just the 14 months from January 2021 to March 2022).
Recent data released by FinCEN suggests that depositary institutions and money service businesses are increasingly reporting more suspicious activity, Pymnts.com said.
“There are a few categories of suspicious activity where increases are more pronounced, two of these are ‘questionable or false identification’ and ‘suspicious concerning the source of funds.’ The former is a particular concern for MSB as filings increased from 2,074 in 2018 to 14,432 in 2019, and the latter is the top priority for depositary institutions,” Pymnts.com said.
The Spotlight
In addition, the report said the data puts the spotlight in a company’s customer due diligence process (CDD). According to FinCEN, and the Bank Secrecy Act regulations, companies need to maintain an AML program with robust CDD rules to verify the identity of the natural persons of legal entity customers who own, control, and profit from companies when those companies open accounts.
The CDD rules should enable companies to classify customers in different risk profiles and raise flags when a transaction may be suspicious, Pymnts.com said.
Pymnts.com stated it has reviewed the AML enforcement actions carried out by FinCEN for the last year to see if the lack of an adequate CDD process contributed to the final decision that a company “failed to implement and maintain an anti-money laundering program that met the minimum requirements.”
“The short answer is yes — all the decisions included references to weak or inadequate CDD processes that facilitated or could have facilitated suspicious transfers,” Pymnts.com said.
Most Recent Case
The most recent case is FinCEN vs USAA Federal Savings Bank, where the bank was fined $140 million for not having a good AML program in place. In this case, the bank failed to report thousands of suspicious transactions and it didn’t have a proper compliance program, according to the analysis.
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