Bank Secrecy Act: Opportunities Exist for FinCEN and the Banking Regulators to Further Strengthen the Framework for Consistent BSA Oversight

GAO-06-386 Published: Apr 28, 2006. Publicly Released: May 30, 2006.
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Highlights

The U.S. government's framework for preventing, detecting, and prosecuting money laundering has been expanding through additional pieces of legislation since the passage of the Bank Secrecy Act (BSA) in 1970. In recent years, noncompliance with BSA requirements has raised concerns in Congress about the ability of federal banking regulators to oversee compliance at depository institutions and ensure that these institutions have the controls necessary to identify suspicious activity. In light of these concerns, GAO was asked to determine how federal banking regulators examine for BSA compliance and identify and track violations to ensure timely corrective action. GAO also was asked to determine how enforcement actions are taken for violations of the BSA.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Office of Thrift Supervision To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, as emerging risks in the money laundering and terrorist-financing areas are identified, should work together to ensure these risks are effectively communicated to examiners and the industry through updates of the interagency examination manual and other guidance, as appropriate.
Closed - Implemented
On July 28, 2006, FinCEN and the regulators(the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) released an updated BSA/AML examination manual. Significant revisions and updates to the manual included risk assessment; automated clearing house transactions; trade finance activities; regulatory and supervisory guidance; emerging money laundering risks; and a reform of the manual to make it more user friendly. Subsequent to any future updates to the examination manual, FinCEN plans to issue other guidance, as appropriate.
Office of the Comptroller of the Currency To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, as emerging risks in the money laundering and terrorist-financing areas are identified, should work together to ensure these risks are effectively communicated to examiners and the industry through updates of the interagency examination manual and other guidance, as appropriate.
Closed - Implemented
On July 28, 2006, FinCEN and the regulators(the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) released an updated BSA/AML examination manual. Significant revisions and updates to the manual included risk assessment; automated clearing house transactions; trade finance activities; regulatory and supervisory guidance; emerging money laundering risks; and a reform of the manual to make it more user friendly. Subsequent to any future updates to the examination manual, FinCEN plans to issue other guidance, as appropriate.
Financial Crimes Enforcement Network To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, as emerging risks in the money laundering and terrorist-financing areas are identified, should work together to ensure these risks are effectively communicated to examiners and the industry through updates of the interagency examination manual and other guidance, as appropriate.
Closed - Implemented
On July 28, 2006, FinCEN and the regulators(the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) released an updated BSA/AML examination manual. Significant revisions and updates to the manual included risk assessment; automated clearing house transactions; trade finance activities; regulatory and supervisory guidance; emerging money laundering risks; and a reform of the manual to make it more user friendly. Subsequent to any future updates to the examination manual, FinCEN plans to issue other guidance, as appropriate.
Federal Deposit Insurance Corporation To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, as emerging risks in the money laundering and terrorist-financing areas are identified, should work together to ensure these risks are effectively communicated to examiners and the industry through updates of the interagency examination manual and other guidance, as appropriate.
Closed - Implemented
On July 28, 2006, FinCEN and the regulators(the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) released an updated BSA/AML examination manual. Significant revisions and updates to the manual included risk assessment; automated clearing house transactions; trade finance activities; regulatory and supervisory guidance; emerging money laundering risks; and a reform of the manual to make it more user friendly. Subsequent to any future updates to the examination manual, FinCEN plans to issue other guidance, as appropriate.
Federal Reserve System To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, as emerging risks in the money laundering and terrorist-financing areas are identified, should work together to ensure these risks are effectively communicated to examiners and the industry through updates of the interagency examination manual and other guidance, as appropriate.
Closed - Implemented
On July 28, 2006, FinCEN and the regulators(the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) released an updated BSA/AML examination manual. Significant revisions and updates to the manual included risk assessment; automated clearing house transactions; trade finance activities; regulatory and supervisory guidance; emerging money laundering risks; and a reform of the manual to make it more user friendly. Subsequent to any future updates to the examination manual, FinCEN plans to issue other guidance, as appropriate.
National Credit Union Administration To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, as emerging risks in the money laundering and terrorist-financing areas are identified, should work together to ensure these risks are effectively communicated to examiners and the industry through updates of the interagency examination manual and other guidance, as appropriate.
Closed - Implemented
On July 28, 2006, FinCEN and the regulators(the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) released an updated BSA/AML examination manual. Significant revisions and updates to the manual included risk assessment; automated clearing house transactions; trade finance activities; regulatory and supervisory guidance; emerging money laundering risks; and a reform of the manual to make it more user friendly. Subsequent to any future updates to the examination manual, FinCEN plans to issue other guidance, as appropriate.
Office of Thrift Supervision To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, to supplement the analyses of shared data on BSA violations, should meet periodically to review the analyses and determine whether additional guidance to examiners is needed.
Closed - Implemented
FinCEN and the regulators (the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) met and reviewed the data for the 3rd quarter of FY2006. The group concluded there was no single issue identified that required clarification. Therefore, no additional guidance to examiners was needed at that time. Going forward the FFIEC/BSA working group agreed to engage in these discussions on a quarterly basis--generally at the meeting following FinCEN's provision of the quarterly figures to the banking agencies.
Office of the Comptroller of the Currency To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, to supplement the analyses of shared data on BSA violations, should meet periodically to review the analyses and determine whether additional guidance to examiners is needed.
Closed - Implemented
FinCEN and the regulators (the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) met and reviewed the data for the 3rd quarter of FY2006. The group concluded there was no single issue identified that required clarification. Therefore, no additional guidance to examiners was needed at that time. Going forward the FFIEC/BSA working group agreed to engage in these discussions on a quarterly basis--generally at the meeting following FinCEN's provision of the quarterly figures to the banking agencies.
Financial Crimes Enforcement Network To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, to supplement the analyses of shared data on BSA violations, should meet periodically to review the analyses and determine whether additional guidance to examiners is needed.
Closed - Implemented
FinCEN and the regulators (the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) met and reviewed the data for the 3rd quarter of FY2006. The group concluded there was no single issue identified that required clarification. Therefore, no additional guidance to examiners was needed at that time. Going forward the FFIEC/BSA working group agreed to engage in these discussions on a quarterly basis--generally at the meeting following FinCEN's provision of the quarterly figures to the banking agencies.
Federal Deposit Insurance Corporation To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, to supplement the analyses of shared data on BSA violations, should meet periodically to review the analyses and determine whether additional guidance to examiners is needed.
Closed - Implemented
FinCEN and the regulators (the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) met and reviewed the data for the 3rd quarter of FY2006. The group concluded there was no single issue identified that required clarification. Therefore, no additional guidance to examiners was needed at that time. Going forward the FFIEC/BSA working group agreed to engage in these discussions on a quarterly basis--generally at the meeting following FinCEN's provision of the quarterly figures to the banking agencies.
Federal Reserve System To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, to supplement the analyses of shared data on BSA violations, should meet periodically to review the analyses and determine whether additional guidance to examiners is needed.
Closed - Implemented
FinCEN and the regulators (the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) met and reviewed the data for the 3rd quarter of FY2006. The group concluded there was no single issue identified that required clarification. Therefore, no additional guidance to examiners was needed at that time. Going forward the FFIEC/BSA working group agreed to engage in these discussions on a quarterly basis--generally at the meeting following FinCEN's provision of the quarterly figures to the banking agencies.
National Credit Union Administration To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, to supplement the analyses of shared data on BSA violations, should meet periodically to review the analyses and determine whether additional guidance to examiners is needed.
Closed - Implemented
FinCEN and the regulators (the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) met and reviewed the data for the 3rd quarter of FY2006. The group concluded there was no single issue identified that required clarification. Therefore, no additional guidance to examiners was needed at that time. Going forward the FFIEC/BSA working group agreed to engage in these discussions on a quarterly basis--generally at the meeting following FinCEN's provision of the quarterly figures to the banking agencies.
Office of Thrift Supervision To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, because of the different terminology the regulators use to classify BSA noncompliance, should jointly assess the feasibility of developing a uniform classification system for BSA noncompliance.
Closed - Implemented
FinCEN and the regulators (the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) met and reviewed the data for the 3rd quarter of FY2006. The group concluded there was no single issue identified that required clarification. Therefore, no additional guidance to examiners was needed at that time. Going forward the FFIEC/BSA working group agreed to engage in these discussions on a quarterly basis--generally at the meeting following FinCEN's provision of the quarterly figures to the banking agencies.
Office of the Comptroller of the Currency To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, because of the different terminology the regulators use to classify BSA noncompliance, should jointly assess the feasibility of developing a uniform classification system for BSA noncompliance.
Closed - Implemented
FinCEN and the regulators (the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) met and reviewed the data for the 3rd quarter of FY2006. The group concluded there was no single issue identified that required clarification. Therefore, no additional guidance to examiners was needed at that time. Going forward the FFIEC/BSA working group agreed to engage in these discussions on a quarterly basis--generally at the meeting following FinCEN's provision of the quarterly figures to the banking agencies.
Financial Crimes Enforcement Network To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, because of the different terminology the regulators use to classify BSA noncompliance, should jointly assess the feasibility of developing a uniform classification system for BSA noncompliance.
Closed - Implemented
FinCEN and the regulators (the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) met and reviewed the data for the 3rd quarter of FY2006. The group concluded there was no single issue identified that required clarification. Therefore, no additional guidance to examiners was needed at that time. Going forward the FFIEC/BSA working group agreed to engage in these discussions on a quarterly basis--generally at the meeting following FinCEN's provision of the quarterly figures to the banking agencies.
Federal Deposit Insurance Corporation To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, because of the different terminology the regulators use to classify BSA noncompliance, should jointly assess the feasibility of developing a uniform classification system for BSA noncompliance.
Closed - Implemented
FinCEN and the regulators (the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) met and reviewed the data for the 3rd quarter of FY2006. The group concluded there was no single issue identified that required clarification. Therefore, no additional guidance to examiners was needed at that time. Going forward the FFIEC/BSA working group agreed to engage in these discussions on a quarterly basis--generally at the meeting following FinCEN's provision of the quarterly figures to the banking agencies.
Federal Reserve System To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, because of the different terminology the regulators use to classify BSA noncompliance, should jointly assess the feasibility of developing a uniform classification system for BSA noncompliance.
Closed - Implemented
FinCEN and the regulators (the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) met and reviewed the data for the 3rd quarter of FY2006. The group concluded there was no single issue identified that required clarification. Therefore, no additional guidance to examiners was needed at that time. Going forward the FFIEC/BSA working group agreed to engage in these discussions on a quarterly basis--generally at the meeting following FinCEN's provision of the quarterly figures to the banking agencies.
National Credit Union Administration To build on the current level of coordination, continue to improve BSA administration, and ensure that emerging compliance risks are addressed, the Director of FinCEN, the Comptroller of the Currency, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration, because of the different terminology the regulators use to classify BSA noncompliance, should jointly assess the feasibility of developing a uniform classification system for BSA noncompliance.
Closed - Implemented
FinCEN and the regulators (the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision and the National Credit Union Administration) met and reviewed the data for the 3rd quarter of FY2006. The group concluded there was no single issue identified that required clarification. Therefore, no additional guidance to examiners was needed at that time. Going forward the FFIEC/BSA working group agreed to engage in these discussions on a quarterly basis--generally at the meeting following FinCEN's provision of the quarterly figures to the banking agencies.

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