News
Regulators Asking More Small Institutions to Invest in Automated Monitoring
By Brian Monroe
printFederal regulators are asking a greater number of community banks and credit unions to invest in automated transactional monitoring systems similar to those used by their larger counterparts, say consultants. The push follows disclosures by U.S. officials that criminals have exploited the financial institutions to deposit the proceeds of narcotics sales and process wires related to illegal gambling and other prohibited transactions, in part because the relatively small companies have few resources for anti-money laundering (AML) controls. Regulators have raised the concerns because many community banks and credit unions can't quickly identify suspicious transactions through the manual monitoring processes they...
TO READ THE FULL STORY
Subscribe
Learn More
Related News
Increasingly vulnerable to sophisticated computer hacking, community banks should reassess their defenses against cybercriminals, U.S. Treasury Department officials told bankers Tuesday.
Penny stock fraud and soon-to-be introduced customer due diligence regulations should be foremost on the minds of compliance officers at small securities firms, believes Kenneth Cherrier, senior vice president and chief supervisory officer at Overland, KS-based Waddell & Reed, Inc.
Thousands of small money services businesses have lost some federal anti-money laundering oversight and guidance due to budget cuts involving two U.S. Treasury agencies, according to current and former government officials.
Hundreds of money services businesses and other small financial institutions will miss the U.S. Treasury Department's June 30 deadline to file all of their anti-money laundering reports electronically, say sources.
The push by community banks and other financial institutions to generate fee income with new products is causing some institutions to run afoul of their examiners, according to federal banking regulators.
Foreign government officials with U.S. accounts are increasingly banking at smaller financial institutions that are vulnerable to financial abuse because of scant compliance resources, say analysts.
Few small financial firms in the U.K. have adequate anti-money laundering and sanctions compliance programs, including enhanced due diligence controls for high-risk clients, Britain's top financial regulator said Monday.
Efforts by the U.S. Treasury Department to get small banks to file their Bank Secrecy Act documents electronically are likely to face stiff resistance despite law enforcement complaints, say consultants.
Compliance officers at smaller financial institutions say that meeting the independent testing requirements of an AML program can be difficult. But current and former regulators say there are ways to keep the entire audit or portions of it in-house, a cost savings, if institutions are creative.
Financial institutions with limited resources often dont seek exemptions for filing currency transaction reports because they are unable or unwilling to handle the required additional due diligence and regulatory scrutiny.
The U.S. Treasury Department's Office of Thrift Supervision cited Peoples Federal Savings Bank and Loan Association for significant weaknesses in its anti-money laundering controls and ordered it to strengthen its policies within two months.
While smaller banks received civil money penalties in 2006, the size of the fines relative to bank size increased.