Bank Safety and Soundness Advisor: AML Violations and Penalties on the Rise


Late last month, FinCEN and the Treasury Department hit Ocean Bank, Miami, Fla. ($3.6 billion) with a $10.9 million civil money penalty. The bank’s deeply flawed anti-money laundering (AML) program – at least as FinCEN describes it – makes it an extreme case. Nevertheless, it isn’t an outlier. Regulators are ramping up supervision of all AML programs, experts say. And as the Ocean Bank civil money penalty demonstrates, noncompliance comes with a hefty cost...

"Keep in mind that the AML program is a process and not an end," says John Podvin, an attorney with Haynes and Boone in Dallas. FinCEN criticized Ocean numerous times for failing to maintain an AML program commensurate with its risk profile. Banks can’t expect to design programs that matches their risk profile exactly. Nor can they know for sure that their regulators will agree with those assessments. But what banks should do – and what examiners will expect them to do – is to constantly reassess the bank’s AML risk and make appropriate changes and upgrades to the bank’s AML process.

"The risk profile is a nebulous concept," he says. "Ten banks will have ten different risk profiles. But it is a process, a constantly evolving program. Banks need to conduct ongoing internal risk assessments to try to determine what its risk is, and then have third parties come in to audit the program and make recommendations. Perfect is not the standard. Banks have to be constantly working on their AML programs, adjusting them, working to mitigate risk."

Excerpts from Bank Safety and Soundness Advisor, Sept. 19, 2011. Online link unavailable.

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