Risk Management Manual of Examination Policies - FDIC

BANK SECRECY ACT, ANTI-MONEY LAUNDERING,
AND OFFICE OF FOREIGN ASSETS CONTROL
deficiency is attributed to internal controls, independent
testing, individual responsible for monitoring day-to-day
compliance, or training. If an apparent violation of Section
326.8(c) is determined to be an isolated program weakness
that does not significantly impair the effectiveness of the
overall compliance program, then a Section 326.8(b)
should not be cited. If one or more program violations are
cited under Section 326.8(c), or are accompanied by
notable infractions of Treasury’s regulation 31 CFR 103,
or management is unwilling or unable to correct the
reported deficiencies, the aggregate citations would likely
point toward an ineffective program and warrant the
additional citing of a 326.8(b) program violation, in
addition to the other program, and/or financial
recordkeeping violations.
When preparing written comments related to apparent
violations cited as a result of deficient BSA compliance
program, as defined in Section 326.8, the following
information should be included in each citation:
• Nature of the violation(s);
• Name(s) of the individual(s) responsible for
coordinating and monitoring compliance with the BSA
(BSA officer);
• Specific internal control deficiencies that contributed
to the apparent violation(s); and
• Management’s response, including planned or taken
corrective action.
BSA Workpapers Evidencing Apparent Violations
BSA examination workpapers that support BSA/AML
apparent violation citations, enforcement actions, SARs,
and CMP referrals to the Treasury should be maintained
for 5 years, since they may be needed to assist further
investigation or other supervisory response. Examination
workpapers should not generally be included as part of a
SAR, enforcement action recommendation, or Treasury
referral, but may be requested for additional supporting
information during a law enforcement investigation.
Civil Money Penalties and
Referrals to FinCEN
When significant apparent violations of the BSA, or cases
of willful and deliberate violations of 31 CFR 103 or
Section 326.8 of the FDIC’s Rules and Regulations are
identified at a state nonmember financial institution,
examiners should determine if a recommendation for
CMPs is appropriate. This assessment should be
conducted in accordance with existing examiner guidance
for consideration of CMPs, detailed within the DSC
Manual.
Section 8.1
Civil penalties for negligence and willful violations of BSA
are detailed in 31 CFR 103.57. This section states that
negligent violations of any regulations under 31 CFR 103
shall not exceed $500. Willful violations for any reporting
requirement for financial institutions under 31 CFR 103
can be assessed a civil penalty up to $100,000 and no less
than $25,000. CMPs may also be imposed by the FDIC for
violations of final Cease and Desist Orders issued under
our authority granted in Section 8(s) of the Federal Deposit
Insurance Act (FDI Act). In these cases, the penalty is
established by Section 8(i)(2) of the FDI Act at up to
$5,000 per day for each day the violation continues.
Recommendations for civil money penalties for violations
of Cease and Desist Orders should be handled in
accordance with outstanding FDIC Directives.
Furthermore, Section 363 of the USA PATRIOT Act
increases the maximum civil and criminal penalties from
$100,000 to up to $1,000,000 for violations of the
following sections of the USA PATRIOT Act:
• Section 311: Special measures enacted by the Treasury
for jurisdictions, financial institutions, or international
transactions or accounts of primary money laundering
concern;
• Section 312: Special due diligence for correspondent
accounts and private banking accounts; and
• Section 313: Prohibitions on U.S. correspondent
accounts with foreign shell banks.
Referring Significant Violations of the BSA to FinCEN
Financial institutions that are substantially noncompliant
with the BSA should be reviewed by the FDIC for
recommendation to FinCEN regarding the issuance of
CMPs. FinCEN is the administrator of the BSA and has
the authority to assess CMPs against any domestic
financial institution, including any insured U.S. branch of a
foreign bank, and any partner, director, officer, or
employee of a domestic financial institution for violations
of the BSA and implementing regulations. Criminal
prosecution is also authorized, when warranted. However,
referrals to FinCEN do not preclude the FDIC from using
its authority to take formal administrative action.
Factors to consider for determining when a referral to
FinCEN is warranted and the guidelines established for
preparing and forwarding referral documentation are
detailed in examiner guidance. When examiners identify
serious BSA program weaknesses at an institution,
including significant apparent violations, the examiner
should consult with the Regional SACM before proceeding
further.
DSC Risk Management Manual of Examination Policies 8.1-35 Bank Secrecy Act (12-04)
Federal Deposit Insurance Corporation