The global financial industry is facing renewed and unwanted scrutiny this week after a report from the International Consortium of Investigative Journalists and BuzzFeed News claimed that banks continued to move illicit funds around the world despite having reported to the United States’ Financial Intelligence center that those transactions and or clients raised suspicions. 
Fincen Files
The report – dubbed the FinCEN (U.S. Treasury’s Financial Crimes Enforcement Network) Files – said many banks around the world did not take action on ongoing illegal activity, despite filing suspicious-activity reports (SARs) with FinCEN. SARs aren’t evidence of wrongdoing, but are required to be filed where designated institutions (like banks, insurance companies and money service businesses) believe that customers and/or their transaction activity are “suspicious”.
Banks, bank holding companies, and their subsidiaries are required by federal regulations to file a SAR for a number of reasons. According to the Federal Financial Institutions Examination Council, they include:
  • “Criminal violations involving insider abuse in any amount.
  • Criminal violations aggregating $5,000 or more when a suspect can be identified.
  • Criminal violations aggregating $25,000 or more regardless of a potential suspect.
  • Transactions conducted or attempted by, at, or through the bank (or an affiliate) and aggregating $5,000 or more, if the bank or affiliate knows, suspects, or has reason to suspect that the transaction:
    • May involve potential money laundering or other illegal activity (e.g., terrorism financing).
    • Is designed to evade the BSA or its implementing regulations.
    • Has no business or apparent lawful purpose or is not the type of transaction that the particular customer would normally be expected to engage in, and the bank knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction.”
What Does This Mean for Anti-Money Laundering (AML) Regulations?
Last week, FinCEN announced a potentially sweeping overhaul of anti-money laundering (AML) and counter-terrorist financing (CTF) rules within the financial sector. The U.S. Treasury department said it is seeking public comment on upcoming regulatory proposals “intended to modernize the regulatory regime to address the evolving threats of illicit finance, and provide financial institutions with greater flexibility in the allocation of resources, resulting in the enhanced effectiveness and efficiency of anti-money laundering programs.”
Experts have suggested these new regulations could target crypto firms and exchanges. But given the new scrutiny placed on banks in the wake of the FinCEN Files, they could also impact banks, casinos and credit unions, among other companies with the ability to move money around the world.
FinCEN said that the proposed rule-making is part of a broader effort to modernize U.S. AML regulations in an effort to make it easier for financial institutions to prioritize resources by enhancing and clarifying requirements.
How GDC Can Help
GDC is a provider of Digital Identity Verification. Reliable, independent electronic verification of customers and counterparties helps Compliance professionals avoid their resources being consumed by slow, manual documentation checks while also improving the customer experience. Accurate, timely monitoring and suspicious activity reporting is enabled by using robust electronic verification of customer’s KYC data.
Even without immediate regulatory changes, this week’s revelations put increased scrutiny on AML and CTF compliance. That’s why Global Data Consortium is an important partner. Our Worldview platform provides a single API without risking Anti-Money Laundering noncompliance. We’re also here to answer many questions you might have regarding the FinCEN files, and how you can be sure that you’re meeting all regulatory requirements.