On Tuesday, FinCEN Director James Freis released the findings in a report, "Financial Institutions Outreach Initiative." The report shows common findings of BSA practices and procedures in those big institutions.
"The Financial Institutions Outreach Initiative contributes to FinCEN's broader understanding of financial industry practices in applying the BSA and provides new insights into what information institutions need to more effectively implement their anti-money laundering programs," says Freis. "As a result of this dialogue, law enforcement investigators and regulators will receive increasingly better information to act against financial crime and illicit activities." Freis made his comments at the American Bankers Association AML-BSA conference.
Key findings in report include:
- Many larger depository institutions have internal account closure policies in place relating to suspicious activity report (SAR) filings; however, the policies differ among the various banks.
- The money laundering-related SAR process is managed within a bank's anti-money laundering (AML) or BSA compliance group, while the fraud-related SAR process is typically handled by other business lines within the bank, including corporate security, fraud prevention, loan risk and recovery, consumer lending operations, and credit card operations.
- While banks indicate that automated transaction monitoring systems to generate "alerts" for further investigation provide added value to their efforts to identify suspicious activity, every bank indicates that they believe their best source of information on possible suspicious activity comes from referrals by front-line bank personnel.
- The vast majority of large depository institutions have established stand-alone financial intelligence units (FIUs) to perform internal analysis of unusual transactions and to support their efforts to comply with reporting requirements under the BSA.
FinCEN also details a number of steps it has taken to provide greater clarity in guidance in response to questions raised by depository institutions.
Beginning in early 2008, Freis says FinCEN set out to better educate large institutions of its regulatory rulemaking and guidance responsibilities. In 2009, FinCEN conducted similar outreach to some of the nation's largest money services businesses, and it has just announced a new outreach initiative with smaller depository institutions.