Increased regulatory scrutiny in the management of AML/BSA
KPMG Regulatory Insights
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As part of the heightened risk standards focus, financial institutions are facing increased regulatory scrutiny in the management of Anti-Money Laundering (AML) and Bank Secrecy Act (BSA) risks. It is crucial for these institutions to understand regulatory expectations and requirements to implement robust compliance programs capable of effectively mitigating risks related to financial crime.
Supervision/Enforcement
With the continuous evolution of sophisticated financial crime patterns, regulators are committed to providing guidance and support for institutions to effectively manage and mitigate financial crime risks. Regulatory focus in areas such as AML/BSA/CFT (Countering the Financing of Terrorism), Know Your Customer (KYC)/Customer Due Diligence (CDD), and transactional activity will continue along with attention to continuously assessing risk and implementing risk-based compliance programs.
In addition to heightened supervisory efforts, there is an uptick in AML/BSA enforcement activities with allegations such as:
With each of the above, regulators are looking at heightened expectations in such areas as:
The following recent regulatory issuances highlight heightened expectations for financial institutions to adhere to AML/BSA/CFT requirements:
Agency | Activity | Description | KPMG Regulatory Alert |
---|---|---|---|
FRB | Indicates that issues with BSA/AML compliance increased in comparison to prior years. |
FRB Reports: Supervision and Regulation; Financial Stability
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FDIC | Provides guidance on AML/CFT/CDD requirements for compliance programs. Cautions banks to stay updated on the latest regulations to mitigate sanctions-related risks especially when relying on third parties. | N/A | |
OCC | Highlights an increase in AML/ BSA compliance risks associated with evolving range of payment methods and accessibility. Banks are urged to “continuously evaluate their BSA/AML risks and corresponding controls to keep pace with new or changing risk profiles”. | Fall 2023 Regulatory Agendas: Key Federal Banking Agencies
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FFIEC | Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual | Updates manual to “reinforce the risk-focused approach to BSA/AML examinations”. | AML Enforcement: SEC Risk Alert & FFIEC Exam Manual Updates
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SEC | Presents observations about key AML requirements based on recent examinations across the broker-dealer industry covering topics such as:
| AML Enforcement: SEC Risk Alert & FFIEC Exam Manual Updates
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FINRA | Identifies new account fraud as an emerging risk | Regulatory Oversight: FINRA 2024 Annual Report
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New Rulemaking
Further, multiple agencies are anticipated to issue financial crime-related rulemaking proposals this year, which will be influenced in large part by the Anti-Money Laundering Act of 2020 and the Corporate Transparency Act of 2020. (See KPMG Regulatory Alerts here and here).
As outlined in the agencies’ individual regulatory agendas, these rulemakings include proposals by the:
Heightened Risk Standards: Focus on AML/BSA
Increased regulatory scrutiny in the management of AML/BSA
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