New Bank Secrecy Legislation Passed!

"DEATH PENALTY" REVISED
A few months ago we wrote about the "death penalty" that had been introduced into Congress. This was the rule that would have made it mandatory to yank the charter of a financial institution that had been convicted of money laundering.

The "death penalty" as it was written was defeated. But the House of Representatives passed, unanimously, in its place, a ruling that would allow a federal regulator to either revoke the charter, or terminate the deposit insurance (depending on the type of institution convicted of a crime of money laundering or a criminal violation of the Bank Secrecy Act.)

The regulator is to weigh several factors in making the decision about the institution.

The involvement and/or "knowledge" of the directors or senior officers.

How far afield the offense was from the established policies and procedures of the institution-and how effective the material content and training is.

How much the institution cooperated with the regulators in this investigation.

What controls were put in place after discovery to prevent the crime's re-occurrence.

The Senate is expected to pass similar legislation in the very near future.

Sources in Washington also tell us that the type and extent of BSA training will also be of considerable importance.

In other words, if an employee "goes bad" and knowingly allows money laundering, and is charged with the crime, the institution can be charged too.

If there is no record of any training in bank secrecy or money laundering, the examination may not go well for the institution.

On the other hand, if there are records showing that the employee had been educated in the requirements of the law, and that policies and procedures in place are correct and adhered to by other employees, the result of the examination could go far towards clearing the institution.

THREE IMPORTANT AREAS FOR TRAINING
The financial institutions have long been warned that there are three very important areas in which their employees need to be trained.

They are:
The Bank Secrecy Act - (Anti Drug Abuse, Money Laundering)
The Bank Protection Act - (Minimum Security Devices and Procedures-Reg P)
The Expedited Funds Availability Act - (Reg CC)

During an examination of your institution, it may very well be that the examiners will go to your front line and ask questions of the personnel who are required to be trained in these laws. Will they have the answers to those questions?

A review of your written policies and training procedures in these areas is definitely in order.

Copyright © 1990 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 1, No. 5, 5/90