Transcript Anti-Money Laundering & Counter Terrorist Financing: Introduction to Money Laundering and Terrorist Financing Law Jerome Walker, Esquire Troutman Sanders LLP New York, New York December 6,

Anti-Money Laundering & Counter Terrorist
Financing: Introduction to Money Laundering
and Terrorist Financing Law
Jerome Walker, Esquire
Troutman Sanders LLP
New York, New York
December 6, 2006
© 2006 Troutman Sanders LLP. All Rights Reserved.
Agenda.
1.
Overview of Federal and Select State Anti-Money Laundering
and Terrorist Financing Laws.
A.
The Board of Governors of the Federal Reserve
System (the “Federal Reserve”).
B.
The Comptroller of the Currency (the “OCC”).
C.
The Federal Deposit Insurance Corporation (the
“FDIC”).
D.
The Office of Thrift Supervision (the “OTS”).
E.
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State Banking Departments.
2
Agenda (continued).
F.
G.
H.
I.
J.
K.
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The Securities and Exchange Commission.
The NASD and Other SROs.
The Financial Crimes Enforcement Network
(“FinCEN”).
The United States Department of Justice.
County District Attorneys.
Other Investigative and Law Enforcement Units.
3
Agenda (continued).
2.
Overview of Enforcement Cases.
A.
The US Sentencing Guidelines.
B.
The Federal Regulatory Agency Matrix.
C.
The Banking Agencies.
D.
The Securities and Exchange Commission and SROs.
E.
Federal and County Prosecutors.
F.
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Duration of Investigation/Enforcement Action.
4
Agenda (continued).
3.
Overview of the Requirements of Financial Institutions
A.
B.
C.
D.
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The Federal Financial Institutions Examination Council
Bank Secrecy Act/Anti-Money Laundering Examination
Manual (2006);
Enforcement Cases;
Reports of Examination;
Policy Positions of the Agencies;
5
Agenda (continued).
4. Overview of the Role of External Advisors and Consultants.
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A.
B.
C.
D.
Pre-Examination Guidance;
Examination Guidance;
Post Examination Guidance;
Corrective Action Letters;
E.
Enforcement Actions;
6
Agenda (continued).
F.
G.
H.
I.
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Guidance to the Compliance Department;
Guidance to the Audit Department;
Guidance to the Legal Department;
Guidance to Executive Management and the Board of
Directors;
7
Overview of Anti-Money Laundering Laws: The Federal
Reserve and the OCC.
1.
Suspicious Activity Reporting. 12 C.F.R. 208.62;
2.
Procedures for Monitoring Bank Secrecy Act Compliance. 12
C.F.R. 208.63;
3.
Suspicious Activity Reporting. 12 C.F.R. 21.11;
4.
Procedures for Monitoring Bank Secrecy Act Compliance. 12
C.F.R. 21.21;
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Overview of Anti-Money Laundering Laws: The FDIC and
the OTS.
1.
Suspicious Activity Reporting. 12 C.F.R. 353;
2.
Procedures for Monitoring Bank Secrecy Act Compliance.
12 C.F.R. 326;
3.
Suspicious Activity Reporting. 12 C.F.R. 563.180;
4.
Procedures for Monitoring Bank Secrecy Act Compliance.
12 C.F.R. 563.177;
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9
Overview of Anti-Money Laundering Laws: Part 300:
Proposed Part 302.
1.
Suspicious Activity Reporting. Part 300 of the General Banking
Regulations;
“Part 300 of the Superintendent’s Regulations requires all entities
organized, licensed or registered under the Banking Law to report to
the Department any criminal activity where the entity is the victim of
the activity or where the activity is engaged in by an employee of the
entity. However, Part 300 does not cover criminal activity where the
institution is the conduit for the activity. Thus, current state
regulations result in the anomalous situation where crimes like
check cashing fraud and check kiting are reportable, but crimes
such as money laundering and terrorist financing are not. Institutions
subject to federal SAR reporting are, however, required to report
such crimes.”
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Overview of Anti-Money Laundering Laws: Article 470.
Section 470.20 Money laundering in the first degree.
A person is guilty of money laundering in the first degree when:
1. Knowing that the property involved in one or more financial
transactions represents:
a. the proceeds of the criminal sale of a controlled substance, he
or she conducts one or more such financial transactions which in
fact involve the proceeds of the criminal sale of a controlled
substance:
(i) With intent to:
(A) promote the carrying on of specified criminal conduct; or
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11
Overview of Anti-Money Laundering Laws: Article 470
(continued).
B) engage in conduct constituting a felony as set forth in section
eighteen hundred two, eighteen hundred three, eighteen hundred
four, eighteen hundred five, eighteen hundred seven or eighteen
hundred eight of the tax law; or
(ii) Knowing that the transaction or transactions in whole or in part are
designed to:
(A) conceal or disguise the nature, the location, the source, the
ownership, or the control of the proceeds of specified criminal
conduct; or
(B) avoid any transaction reporting requirement imposed by law; and
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12
Overview of Anti-Money Laundering Laws: Article 470
(continued).
(iii) The total value of the property involved in such financial transaction
or transactions exceeds five hundred thousand dollars; or
b.
the proceeds of a class A, B or C felony, or of a crime in any
other jurisdiction that is or would be a class A, B or C felony under
the laws of this state, he or she conducts one or more such financial
transactions which involve the proceeds of any such felony:
(i) With intent to:
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13
Overview of Anti-Money Laundering Laws: Article 470
(continued).
(A) promote the carrying on of specified criminal conduct; or
(B) engage in conduct constituting a felony as set forth in section
eighteen hundred two, eighteen hundred three, eighteen hundred
four, eighteen hundred five, eighteen hundred seven or eighteen
hundred eight of the tax law; or
(ii) Knowing that the transaction or transactions in whole or in part are
designed to:
(A) conceal or disguise the nature, the location, the source, the
ownership, or the control of the proceeds of specified criminal
conduct; or
(B) avoid any transaction reporting requirement imposed by law;
and
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Overview of Anti-Money Laundering Laws: Article 470
(continued).
(iii) The total value of the property involved in such financial
transaction or transactions exceeds one million dollars; or
2. He or she conducts one or more financial transactions involving
property represented to be:
(a) the proceeds of the criminal sale of a controlled substance, or
represented to be property used to conduct or facilitate the criminal
sale of a controlled substance:
(i) With intent to:
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15
Overview of Anti-Money Laundering Laws: Article 470
(continued).
(A) promote the carrying on of specified criminal conduct; or
(B) conceal or disguise the nature, the location, the source, the
ownership, or the control of the property believed to be the proceeds
of specified criminal conduct; or
(C) avoid any transaction reporting requirement imposed by law;
and
(ii) The total represented value of the property involved in such
financial transaction or transactions exceeds five hundred thousand
dollars; or
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16
Overview of Anti-Money Laundering Laws: Article 470
(continued).
(b) the proceeds of a class A, B or C felony or of a crime in any other
jurisdiction that is or would be a class A, B or C felony under the
laws of this state, or represented to be property used to conduct or
facilitate such crimes:
(i) With intent to:
(A) promote the carrying on of specified criminal conduct; or
(B) conceal or disguise the nature, the location, the source, the
ownership, or the control of property believed to be the proceeds of
specified criminal conduct; or
(C) avoid any transaction reporting requirement imposed by law; and
(ii) The total represented value of the property involved in such
financial transaction or transactions exceeds one million dollars.
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Overview of Anti-Money Laundering Laws: NASD Rule
3011.
On or before April 24, 2002, each member shall develop and
implement a written anti-money laundering program reasonably
designed to achieve and monitor the member's compliance with the
requirements of the Bank Secrecy Act (31 U.S.C. 5311, et seq.), and
the implementing regulations promulgated thereunder by the
Department of the Treasury. Each member's anti-money laundering
program must be approved, in writing, by a member of senior
management. The anti-money laundering programs required by this
Rule shall, at a minimum,
(a) Establish and implement policies and procedures that can be
reasonably expected to detect and cause the reporting of
transactions required under 31 U.S.C. 5318(g) and the implementing
regulations thereunder;
(b) Establish and implement policies, procedures, and internal
controls reasonably designed to achieve compliance with the Bank
Secrecy Act and the implementing regulations thereunder;
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Overview of Anti-Money Laundering Laws: NASD Rule
3011 (continued).
(c) Provide for annual (on a calendar-year basis) independent
testing for compliance to be conducted by member personnel or by
a qualified outside party, unless the member does not execute
transactions for customers or otherwise hold customer accounts or
act as an introducing broker with respect to customer accounts (e.g.,
engages solely in proprietary trading or conducts business only with
other broker-dealers), in which case such "independent testing" is
required every two years (on a calendar-year basis);
(d) Designate and identify to NASD (by name, title, mailing address,
e-mail address, telephone number, and facsimile number) an
individual or individuals responsible for implementing and monitoring
the day-to-day operations and internal controls of the program (such
individual or individuals must be an associated person of the
member) and provide prompt notification to NASD regarding any
change in such designation(s); and
(e) Provide ongoing training for appropriate personnel.
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Overview of Anti-Money Laundering Laws: FinCEN and
Commercial Banks.
1.
Commercial Banks
A.
B.
C.
D.
E.
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Anti-Money Laundering Programs. 31 C.F.R. 103.120;
Suspicious Activity Reporting. 31 C.F.R. 103.18;
Currency Transactions Reports. 31 C.F.R. 103.22;
Reports of Foreign Accounts. 31 C.F.R. 103.24;
Prohibition on Structuring. 31 C.F.R. 103.63;
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Overview of Anti-Money Laundering Laws: FinCEN and
Commercial Banks (continued).
F.
G.
H.
I.
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Customer Information Programs. 31 C.F.R. 103.121;
Correspondent Accounts Due Diligence for Foreign
Financial Institutions. 31 C.F.R. 103.176;
Prohibition on Correspondent Accounts for Foreign
Bank Shells. 31 C.F.R. 103.177;
Private Banking Due Diligence. 31 C.F.R. 103.178;
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Overview of Anti-Money Laundering Laws: FinCEN and
Investment Banks.
2. Investment Banks
A.
Anti-Money Laundering Programs. 31 C.F.R. 103.120;
B.
Suspicious Activity Reporting. 31 C.F.R. 103.19;
C.
Currency Transactions Reports. 31 C.F.R. 103.22;
D.
Reports of Foreign Accounts. 31 C.F.R. 103.24;
E.
Prohibition on Structuring. 31 C.F.R. 103.63;
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Overview of Anti-Money Laundering Laws: FinCEN and
Investment Banks (continued).
F.
G.
H.
I.
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Customer Information Programs. 31 C.F.R. 103.122;
Correspondent Accounts Due Diligence for Foreign
Financial Institutions. 31 C.F.R. 103.176;
Prohibition on Correspondent Accounts for Foreign
Bank Shells. 31 C.F.R. 103.177;
Private Banking Due Diligence. 31 C.F.R. 103.178;
23
Overview of Anti-Money Laundering Laws: FinCEN and
Other Financial Institutions.
2. Other Financial Institutions
A.
Anti-Money Laundering Programs for Insurance
Companies. 31 C.F.R. 103.137;
B.
Suspicious Activity Reporting for Insurance
Companies. 31 C.F.R. 103.16;
C.
Anti-Money Laundering Programs for Money Service
Businesses. 31 C.F.R. 103.125;
D.
Suspicious Activity Reporting for Money Service
Businesses. 31 C.F.R. 103.20;
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Overview of Anti-Money Laundering Laws: FinCEN and
Other Financial Institutions (continued).
E.
F.
G.
H.
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Anti-Money Laundering Programs for Mutual Funds.
31 C.F.R. 103.130;
Customer Information Programs for Mutual Funds.
31 C.F.R. 103.131;
Anti-Money Laundering Programs for Operators of
Credit Card Systems. 31 C.F.R. 103.135;
Anti-Money Laundering Programs for Dealers in
Precious Metals, Precious Stones and Jewels.
31 C.F.R. 103.140;
25
Overview of Anti-Money Laundering Laws: FinCEN and
Other Financial Institutions (continued).
I.
J.
K.
L.
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Suspicious Activity Reporting for Futures Commission
Merchants and Introducing Brokers in Commodities.
31 C.F.R. 103.17;
Customer Identification Programs for Futures
Commission Merchants and Introducing Brokers in
Commodities. 31 C.F.R. 103.123;
Anti-Money Laundering Programs for Casinos.
31 C.F.R. 103.120;
Suspicious Activity Reporting Programs for Casinos.
31 C.F.R. 103.131;
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Overview of Anti-Money Laundering Laws: Exemptions. 31
C.F.R. 103.170.
Certain Financial Institutions exempted from the requirement to have
an Anti-Money Laundering Program:
1.
Pawnbroker;
2.
Loan or finance company;
3.
Travel agency;
4.
Telegraph company;
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Overview of Anti-Money Laundering Laws: Exemptions. 31
C.F.R. 103.170. (continued).
5.
Seller of vehicles, including automobiles, airplanes, and boats;
6.
Person involved in real estate closings and settlements;
7.
Private banker;
8.
Commodity pool operator;
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Overview of Anti-Money Laundering Laws: Compulsory
Cease and Desist Orders. 12 U.S.C. 1818 (s)(3).
If the appropriate Federal banking agency determines that an
insured depository institution has failed to:
1.
2.
Establish and maintain an Anti-Money Laundering Program; or
Correct any problem with the procedures maintained which
was previously reported to the depository institution by such
agency,
the agency shall issue a cease and desist order under 12 U.S.C.
1818 (b) or 12 U.S.C. 1818 (c).
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Overview of Anti-Money Laundering Laws: Laundering of
Monetary Instruments. 18 U.S.C. 1956.
Whoever, knowing that the property involved in a financial
transaction represents the proceeds of some form of unlawful
activity, conducts or attempts to conduct such a financial transaction
which in fact involves the proceeds of specified unlawful activity:
1.
2.
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with the intent to promote the carrying on of specified unlawful
activity; or
with intent to engage in conduct constituting a violation of
section 7201 or 7206 of the Internal Revenue Code of 1986; or
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Overview of Anti-Money Laundering Laws: Laundering of
Monetary Instruments. 18 U.S.C. 1956 (continued).
3.
knowing that the transaction is designed in whole or in part:
i.
ii
to conceal or disguise the nature, the location, the
source, the ownership, or the control of the proceeds of
specified unlawful activity; or
to avoid a transaction reporting requirement under
State or Federal law,
shall be sentenced to a fine of not more than $500,000 or twice the
value of the property involved in the transaction, whichever is
greater, or imprisonment for not more than twenty years, or both.
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Overview of Anti-Money Laundering Laws: Laundering of
Monetary Instruments. 18 U.S.C. 1956 (continued).
Whoever transports, transmits, or transfers, or attempts to transport,
transmit, or transfer a monetary instrument or funds from a place in
the United States to or through a place outside the United States or
to a place in the United States from or through a place outside the
United States:
1.
with the intent to promote the carrying on of specified unlawful
activity; or
2.
knowing that the monetary instrument or funds involved in the
transportation, transmission, or transfer represent the proceeds
of some form of unlawful activity and knowing that such
transportation, transmission, or transfer is designed in whole or
in part:
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32
Overview of Anti-Money Laundering Laws: Laundering of
Monetary Instruments. 18 U.S.C. 1956 (continued).
1.
to conceal or disguise the nature, the location, the source, the
ownership, or the control of the proceeds of specified unlawful
activity; or
2.
to avoid a transaction reporting requirement under State or
Federal law,
shall be sentenced to a fine of not more than $500,000 or twice the
value of the monetary instrument or funds involved in the
transportation, transmission, or transfer, whichever is greater, or
imprisonment for not more than twenty years, or both.
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Overview of Anti-Money Laundering Laws: Laundering of
Monetary Instruments. 18 U.S.C. 1956 (continued).
Whoever, with the intent:
1.
2.
3.
to promote the carrying on of specified unlawful activity;
to conceal or disguise the nature, location, source, ownership,
or control of property believed to be the proceeds of specified
unlawful activity; or
to avoid a transaction reporting requirement under State or
Federal law, conducts or attempts to conduct a financial
transaction involving property represented to be the proceeds
of specified unlawful activity, or property used to conduct or
facilitate specified unlawful activity,
shall be fined under this title or imprisoned for not more than
20 years, or both.
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Overview of Anti-Money Laundering Laws: Laundering of
Monetary Instruments. 18 U.S.C. 1956 (continued).
Whoever conducts or attempts to conduct a transaction described in
18 U.S.C. 1956 (a)(1) or 18 U.S.C. 1956 (a)(3), or 18 U.S.C. 1957,
or a transportation, transmission, or transfer described in 12 U.S.C.
1956 (a)(2), is liable to the United States for a civil penalty of not
more than the greater of the value of the property, funds, or
monetary instruments involved in the transaction or $10,000.
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Overview of Anti-Money Laundering Laws: Specified
Unlawful Activity. 18 U.S.C. 1956 (c) (7).
The term “specified unlawful activity” means:
1.
any act or activity constituting an offense listed in 18
U.S.C. 1961 (1) except an act which is indictable under
subchapter II of chapter 53 of title 31;
2.
with respect to a financial transaction occurring in whole or in
part in the United States, an offense against a foreign nation
involving
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36
Overview of Anti-Money Laundering Laws: Specified
Unlawful Activity. 18 U.S.C. 1956 (c) (7) (continued).
i.
ii.
iii.
iv.
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the manufacture, importation, sale, or distribution of a
controlled substance;
murder, kidnapping, robbery, extortion, destruction of
property by means of explosive or fire, or a crime of
violence;
fraud, or any scheme or attempt to defraud, by or
against a foreign bank;
bribery of a public official, or the misappropriation,
theft, or embezzlement of public funds by or for the
benefit of a public official;
37
Overview of Anti-Money Laundering Laws: Specified
Unlawful Activity. 18 U.S.C. 1956 (c) (7) (continued).
v.
smuggling or export control violations involving
a.
an item controlled on the United States Munitions List
established under section 38 of the Arms Export
Control Act or
b.
an item controlled under regulations under the Export
Administration Regulations; or
vi. an offense with respect to which the United States would be
obligated by a multilateral treaty, either to extradite the alleged
offender or to submit the case for prosecution, if the offender were
found within the territory of the United States;
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Overview of Anti-Money Laundering Laws: Specified
Unlawful Activity. 18 U.S.C. 1956 (c) (7) (continued).
vii. any act or acts constituting a continuing criminal enterprise;
viii. an offense under:
1.
2.
3.
4.
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section 32 (relating to the destruction of aircraft);
section 37 (relating to violence at international
airports);
section 115 (relating to influencing, impeding, or
retaliating against a Federal official by threatening or
injuring a family member)
section 152 (relating to concealment of assets; false
oaths and claims; bribery);
39
Overview of Anti-Money Laundering Laws: Specified
Unlawful Activity. 18 U.S.C. 1956 (c) (7) (continued).
5.
section 175c (relating to the variola virus);
6.
section 215 (relating to commissions or gifts for procuring
loans);
section 351(relating to congressional or Cabinet officer
assassination);
any of sections 500 through 503 (relating to certain
counterfeiting offenses);
section 513 (relating to securities of States and private
entities);
7.
8.
9.
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Overview of Anti-Money Laundering Laws: Specified
Unlawful Activity. 18 U.S.C. 1956 (c) (7) (continued).
10. section 541 (relating to goods falsely classified);
11. section 542 (relating to entry of goods by means of false
statements);
12. section 545 (relating to smuggling goods into the United
States);
13. section 549 (relating to removing goods from Customs
custody);
14. section 641 (relating to public money, property, or records);
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41
Overview of Anti-Money Laundering Laws: Specified
Unlawful Activity. 18 U.S.C. 1956 (c) (7) (continued).
15. section 656 (relating to theft, embezzlement, or misapplication
by bank officer or employee);
16. section 657 (relating to lending, credit, and insurance
institutions);
17. section 658 (relating to property mortgaged or pledged to farm
credit agencies);
18. section 666 (relating to theft or bribery concerning programs
receiving Federal funds);
19. section 793, 794 or 798 (relating to espionage)
20. section 831 (relating to prohibited transactions involving
nuclear materials);
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42
Overview of Anti-Money Laundering Laws: Specified
Unlawful Activity. 18 U.S.C. 1956 (c) (7) (continued).
21.
22.
23.
24.
25.
26.
27.
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section 844 (f) or (i) (relating to destruction by explosives or
fire of Government property or property affecting interstate or
foreign commerce);
section 875 (relating to interstate communications);
section 922 (l) (relating to the unlawful importation of
firearms);
section 924 (n) (relating to firearms trafficking);
section 956 (relating to conspiracy to kill, kidnap, maim, or
injure certain property in a foreign country);
section 1005 (relating to fraudulent bank entries);
section 1006 (relating to fraudulent Federal credit
institution entries);
43
Overview of Anti-Money Laundering Laws: Specified
Unlawful Activity. 18 U.S.C. 1956 (c) (7) (continued).
28. section 1007 (relating to Federal Deposit Insurance
transactions);
29. section 1014 (relating to fraudulent loan or credit applications);
30. section 1030 (relating to computer fraud and abuse);
31. section 1032 (relating to concealment of assets from
conservator, receiver, or liquidating agent of financial
institution);
32. section 1111 (relating to murder);
33. section 1114 (relating to murder of United States law
enforcement officials);
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Overview of Anti-Money Laundering Laws: Specified
Unlawful Activity. 18 U.S.C. 1956 (c) (7) (continued).
34. section 1116 (relating to murder of foreign officials, official
guests, or internationally protected persons)
35. section 1201 (relating to kidnapping);
36. section 1203 (relating to hostage taking);
37. section 1361 (relating to willful injury of Government property);
38. section 1363 (relating to destruction of property within the
special maritime and territorial jurisdiction);
39. section 1708 (theft from the mail);
40. section 1751 (relating to Presidential assassination);
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45
Overview of Anti-Money Laundering Laws: Specified
Unlawful Activity. 18 U.S.C. 1956 (c) (7) (continued).
41. section 2113 or 2114 (relating to bank and postal robbery and
theft);
42. section 2280 (relating to violence against maritime navigation);
43. section 2281 (relating to violence against maritime fixed
platforms);
44. section 2319 (relating to copyright infringement);
45. section 2320 (relating to trafficking in counterfeit goods and
services);
46. section 2332 (relating to terrorist acts abroad against United
States nationals);
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Overview of Anti-Money Laundering Laws: Specified
Unlawful Activity. 18 U.S.C. 1956 (c) (7) (continued).
47. section 2332a (relating to use of weapons of mass destruction);
48. section 2332b (relating to international terrorist acts
transcending national boundaries);
49. section 2332g (relating to missile systems designed to destroy
aircraft);
50. section 2332h (relating to radiological dispersal devices);
51. section 2339A or 2339B (relating to providing material support
to terrorists);
52. section 46502 of title 49, a felony violation of the Chemical
Diversion and Trafficking Act of 1988 (relating to precursor and
essential chemicals);
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Overview of Anti-Money Laundering Laws: Specified
Unlawful Activity. 18 U.S.C. 1956 (c) (7) (continued).
53. section 590 of the Tariff Act of 1930 (relating to aviation
smuggling);
54. section 422 of the Controlled Substances Act (relating to
transportation of drug paraphernalia);
55. section 38 (c) (relating to criminal violations) of the Arms
Export Control Act;
56. section 11 (relating to violations) of the Export Administration
Act of 1979);
57. section 206 (relating to penalties) of the International
Emergency Economic Powers Act;
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48
Overview of Anti-Money Laundering Laws: Specified
Unlawful Activity. 18 U.S.C. 1956 (c) (7) (continued).
58. section 16 (relating to offenses and punishment) of the Trading
with the Enemy Act;
59. any felony violation of section 15 of the Food Stamp Act of
1977 (relating to food stamp fraud) involving a quantity of
coupons having a value of not less than $5,000;
60. any violation of section 543(a)(1) of the Housing Act of 1949
(relating to equity skimming);
61. any felony violation of the Foreign Agents Registration Act of
1938;
62. any felony violation of the Foreign Corrupt Practices Act;
61. section 92 of the Atomic Energy Act of 1954 (relating to
prohibitions governing atomic weapons);
62. environmental crimes;
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Overview of Anti-Money Laundering Laws: Specified
Unlawful Activity. 18 U.S.C. 1956 (c)(7) (continued).
ix.
x.
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a felony violation of the Federal Water Pollution Control Act,
the Ocean Dumping Act, the Act to Prevent Pollution from
Ships, the Safe Drinking Water Act, or the Resources
Conservation and Recovery Act; or
any act or activity constituting an offense involving a Federal
health care offense;
50
Overview of Anti-Money Laundering Laws: Laundering of
Monetary Instruments 18 U.S.C. 1956 (continued).
Jurisdiction over foreign persons
For purposes of adjudicating an action filed or enforcing a penalty
ordered under this section, the district courts shall have jurisdiction
over any foreign person, including any financial institution authorized
under the laws of a foreign country, against whom the action is
brought, if service of process upon the foreign person is made under
the Federal Rules of Civil Procedure or the laws of the country in
which the foreign person is found, and
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51
Overview of Anti-Money Laundering Laws: Laundering of
Monetary Instruments 18 U.S.C. 1956 (continued).
1.
the foreign person commits an offense under 18 U.S.C. 1956
(a) involving a financial transaction that occurs in whole or in
part in the United States;
2.
the foreign person converts, to his or her own use, property in
which the United States has an ownership interest by virtue of
the entry of an order of forfeiture by a court of the United
States; or
3.
the foreign person is a financial institution that maintains a
bank account at a financial institution in the United States.
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Overview of Anti-Money Laundering Laws: Engaging in
Monetary Transactions in Property Derived from Specified
Unlawful Activity. 18 U.S.C. 1957.
Whoever, in any of the circumstances set forth in subsection (d),
knowingly engages or attempts to engage in a monetary transaction
in criminally derived property of a value greater than $10,000 and is
derived from specified unlawful activity, shall be punished:
1.
2.
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A fine or imprisonment for not more than ten years or both.
An alternate fine of not more than twice the amount of the
criminally derived property involved in the transaction.
53
Overview of Anti-Money Laundering Laws: Engaging in
Monetary Transactions in Property Derived from Specified
Unlawful Activity. 18 U.S.C. 1957.
The circumstances referred to in subsection (a) are:
1.
2.
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that the offense takes place in the U. S. or in the special
maritime and territorial jurisdiction of the United States; or
that the offense takes place outside the United States and such
special jurisdiction, but the defendant is a United States
person.
54
Overview of Terrorist Financing Laws: Office of Foreign
Asset Control.
OFAC is an office of the U.S. Treasury that administers and enforces
economic and trade sanctions based on U.S. foreign policy and
national security goals against entities such as targeted foreign
countries, terrorists, international narcotics traffickers, and those
engaged in activities related to the proliferation of weapons of mass
destruction.
11/6/2015
55
Overview of Terrorist Financing Laws: Office of Foreign
Asset Control (continued).
OFAC acts under Presidential wartime and national emergency
powers, as well as authority granted by specific legislation, to
impose controls on transactions and to freeze assets under U.S.
jurisdiction. Many of the sanctions are based on United Nations and
other international mandates, therefore, they are multilateral in
scope, and involve close cooperation with allied governments.
Other sanctions are specific to the interests of the United States.
OFAC has been delegated responsibility by the Secretary of the
Treasury for developing, promulgating, and administering U.S.
sanctions programs.
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56
Overview of Terrorist Financing Laws: Office of Foreign
Asset Control (continued).
All U.S. persons must comply with OFAC’s regulations. In general,
the regulations require U.S. persons to:
1.
2.
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Block accounts and other property of specified countries,
entities, and individuals.
Prohibit or reject unlicensed trade and financial transactions
with specified countries, entities, and individuals.
57
Overview of Terrorist Financing Laws: Office of Foreign
Asset Control, Licensing (continued).
OFAC has the authority, through a licensing process, to permit
certain transactions that would otherwise be prohibited under its
regulations. OFAC can issue a license to engage in an otherwise
prohibited transaction when it determines that the transaction does
not undermine the U.S. policy objectives of the particular sanctions
program, or is otherwise justified by U.S. national security or foreign
policy objectives. OFAC can also promulgate general licenses,
which authorize categories of transactions, such as allowing
reasonable service charges on blocked accounts, without the need
for case-by-case authorization from OFAC.
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58
Overview of Terrorist Financing Laws: Office of Foreign
Asset Control, Reporting (continued).
Banks must report all blockings to OFAC within ten days of the
occurrence and annually by September 30 concerning those assets
blocked (as of June 30). Once assets or funds are blocked, they
should be placed in a blocked account. Prohibited transactions that
are rejected must also be reported to OFAC within ten days of the
occurrence.
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59
Overview of Terrorist Financing Laws: Office of Foreign
Asset Control, Reporting (continued).
Banks must keep a full and accurate record of each rejected
transaction for at least five years after the date of the transaction.
For blocked property (including blocked transactions), records must
be maintained for the period the property is blocked and for five
years after the date the property is unblocked.
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60
Overview of Terrorist Financing Laws: Office of Foreign
Asset Control; Trading with the Enemy Act (continued).
Trading With the Enemy Act, 50 U.S.C. 1-44
[North Korea, Cuba, Transaction Control Regulations]
1.
2.
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provides for ten years imprisonment, $1 million fine for
corporations, and a $100,000 fine for individuals, as well as
forfeiture of funds or other property involved in violations.
organizations or individuals convicted of violating a
criminal statute may be fined the greater of the amount
specified in the statute, or twice the pecuniary gain or loss from
the violation and that individuals may be fined $250,000 for
felonies;
61
Overview of Terrorist Financing Laws: Office of Foreign Asset Control;
International Emergency Economic Powers Act (continued).
International Emergency Economic Powers Act, 50 U.S.C.
1701-06 [Diamond Trading, Sudan, Iran, Zimbabwe, the
Balkans, Terrorism, Narcotics, Nonproliferation, Syria, and Burma]
1.
2.
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provides for up to 20 years imprisonment, $500,000 in fines for
corporations and USD250,000 for individuals. Civil penalties of
up to $50,000 may be imposed administratively.
organizations or individuals convicted of violating a
criminal statute may be fined the greater of the amount
specified in the statute, or twice the pecuniary gain or loss from
the violation, or $500,000 for felonies and that individuals may
be fined $250,000 for felonies;
62
Overview of Terrorist Financing Laws: Office of Foreign Asset Control;
International Security and Development Cooperation Act (continued).
International Security and Development Cooperation Act,
22 U.S.C. 2349 aa-9 (Iran) has no criminal
penalties, but general Customs and other relevant penalty
provisions may apply to particular circumstances;
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63
Overview of Terrorist Financing Laws: Office of Foreign
Asset Control; Cuba (continued).
The Cuban Democracy Act , 22 U.S.C. 6001-10
has the same fines as the Trading with the Enemy Act.
The Cuban Liberty and Democratic Solidarity
Act, 22 U.S.C. 6021-91, has the same fines as the Trading with the
Enemy Act.
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64
Overview of Terrorist Financing Laws: Office of Foreign Asset Control;
The Antiterrorism and Effective Death Penalty Act (continued).
The Antiterrorism and Effective Death Penalty Act, (8 U.S.C. 219, 18
U.S.C. 2332d and 18 U.S.C. 2339b) [Cuba, North Korea,
Iran, Syria and Sudan] provides for criminal penalties of $500,000
per count against corporations, and ten years imprisonment and/or
$250,000 per count for individuals, for willful violations;
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65
Overview of Terrorist Financing Laws: Office of Foreign Asset Control;
The Foreign Narcotics Kingpin Designation Act (continued).
The Foreign Narcotics Kingpin Designation Act, 21
U.S.C. 1901-1908, provides for criminal penalties of $10 million
per count against corporations, and thirty years imprisonment and/or
$5 million per count for individuals, for willful violations.
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66
In the Matter of ABN AMRO Bank N.V., ABN AMRO Bank N.V., New
York Branch and ABN AMRO Bank N.V., Chicago Branch, FRB Dkt.
No. 05 – 035 – B - FB (Cease and Desist; Direction) (December 19,
2005) (continued).
After the execution of the written agreement, ABN AMRO discovered
and provided additional information to the regulatory agencies such
as:
1. ABN AMRO lacked adequate risk management and legal
review policies and procedures to ensure compliance with
applicable U.S. law, and failed to adhere to those policies and
procedures that it did have. As a result, one of ABN AMRO’s
overseas branches was able to develop and implement “special
procedures” for certain funds transfers, check clearing operations,
and letter of credit transactions that were designed and used to
circumvent the compliance systems established by the branches to
ensure compliance with the laws of the U.S.
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67
In the Matter of ABN AMRO Bank N.V., ABN AMRO Bank N.V., New
York Branch and ABN AMRO Bank N.V., Chicago Branch, FRB Dkt.
No. 05 – 035 – B – CMP - FB (Civil Money Penalty) (December 19,
2005) (continued).
The Federal Reserve and OFAC imposed a $40,000,000 civil money
penalty against ABN AMRO. FinCEN also imposed a $30,000,000
penalty against ABN AMRO. The Banking Department imposed a
$20,000,000 civil money penalty against ABN AMRO and the Illinois
Banking Department imposed a $15,000,000 civil money penalty.
ABN AMRO also made a voluntary $5,000,000 payment to the
Illinois Bank Examiners’ Education Foundation.
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68
In the Matter of BankAtlantic, Fort Lauderdale, Florida, OTS Docket No.
05551, Order Nos. ATL – 2006 - 06 and 07 (April 26, 2006).
This cease and desist and civil money penalty order was
commenced against BankAtlantic by the OTS. At the
outset the OTS acknowledged that the bank had
“undertaken corrective action, including the adoption and
implementation of a BSA Corrective Action Plan during
November 2004 and the submission of a corrective
action response, dated August 12,2005, that set forth the
Bank's detailed responses and corrective actions to
address the deficiencies, weaknesses and regulatory
violations noted in the 2004 Examination.”
11/6/2015
69
In the Matter of BankAtlantic, Fort Lauderdale, Florida, OTS Docket No.
05551, Order Nos. ATL – 2006 - 06 and 07 (April 26, 2006)
(continued).
“The bank also conducted an extensive review of
historical account transaction activity, using a qualified
external firm, and has made appropriate SAR filings on
the basis of that review. Notwithstanding the Bank's
corrective actions, [OTS] is of the opinion that a cease
and desist order for affirmative relief and a civil money
penalty assessment are necessary and appropriate to
address the violations, deficiencies, and weaknesses
discussed in the 2004 Examination, and to ensure that
the Bank continues the corrective actions taken and that
such actions remain adequate to provide for the Bank's
future compliance.”
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70
In the Matter of BankAtlantic, Fort Lauderdale, Florida, OTS Docket No.
05551, Order Nos. ATL – 2006 - 06 and 07 (April 26, 2006)
(continued).
The order required the savings bank to make
enhancements to its customer information program, its
AML internal controls, its training program, its
independent testing program, its CTR filings program
and its suspicious activity reporting program.
The
savings bank was required to pay a $10,000,000 civil
money penalty, which was concurrent with the civil
forfeiture of $10,000,000 assessment by the U.S.
Department of Justice in a Deferred Prosecution
Agreement with the bank.
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71
In the Matter of The New York Branch, ABN AMRO Bank N.V., New
York, New York, No. 2005-5 (Assessment of Civil Money Penalty)
(December 19, 2005) (continued).
FinCEN concluded that the New York Branch violated
the Bank Secrecy Act because it did not establish and
implement an adequate Bank Secrecy Act Compliance
or Anti-Money Laundering Program. To support its
conclusion, FinCEN asserted that until August 1999, the
New York Branch had no formal procedure for
conducting due diligence on financial institutions holding
correspondent accounts with the Clearing Center.
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72
In the Matter of The New York Branch, ABN AMRO Bank N.V., New
York, New York, No. 2005-5 (Assessment of Civil Money Penalty)
(December 19, 2005) (continued).
FinCEN also asserted that after establishing formal
procedures the New York Branch lacked complete
documentation to adequately assess the potential for
money laundering and execute a risk rating from many of
these financial institutions including important
information on ownership, management, customer base
or business activities.
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73
In the Matter of The New York Branch, ABN AMRO Bank N.V., New
York, New York, No. 2005-5 (Assessment of Civil Money Penalty)
(December 19, 2005) (continued).
FinCEN also asserted that the procedures and controls
failed to ensure that the New York Branch gathered and
reviewed meaningful information from the financial
institutions or other readily available sources on the
existence of anti-money laundering programs, relevant
host country laws and regulations, or similar safeguards
at the correspondent institutions.
11/6/2015
74
In the Matter of The New York Branch, ABN AMRO Bank N.V., New
York, New York, No. 2005-5 (Assessment of Civil Money Penalty)
(December 19, 2005) (continued).
FinCEN asserted that the New York Branch failed to
adequately monitor funds transfers processed by the
Clearing Center for potential suspicious monitoring by a
single employee, despite the need for automated
monitoring of the funds transfers.
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75
In the Matter of The New York Branch, ABN AMRO Bank N.V., New
York, New York, No. 2005-5 (Assessment of Civil Money Penalty)
(December 19, 2005) (continued).
Based on its findings, FinCEN imposed a civil money
penalty against ABN AMRO in the amount of
$30,000,000. The Federal Reserve, OFAC, the Banking
Department and the Illinois Banking Department also
imposed civil money penalties against ABN AMRO. In
total, ABN AMRO paid $80,000,000 in civil money
penalties.
11/6/2015
76
In the Matter of The New York and Miami Branches of Banco de Chile,
No. 2005-3 (Assessment of Civil Money Penalty) (October 12, 2005)
(continued).
Senior New York Branch management was found to
have circumvented established policies, violated laws
and regulations, and obstructed examinations by
intentionally misleading examiners in order to conceal
the purpose, existence and true funding source of certain
suspicious accounts and loans maintained by the New
York Branch.
11/6/2015
77
In the Matter of The New York and Miami Branches of Banco de Chile,
No. 2005-3 (Assessment of Civil Money Penalty) (October 12, 2005)
(continued).
FinCEN concluded that a majority of accounts tested by
examiners failed to contain key information regarding the
occupational and financial profile of an associate of the
prominent Chilean politically exposed person. Insufficient
customer information and due diligence practices
undermined the New York Branch’s ability to adequately
monitor these accounts for suspicious activity.
11/6/2015
78
In the Matter of The New York and Miami Branches of Banco de Chile,
No. 2005-3 (Assessment of Civil Money Penalty) (October 12, 2005)
(continued).
FinCEN concluded that an insufficient compliance
environment contributed to the Miami Branch's failure to
identify and properly monitor the accounts of a prominent
Chilean politically exposed person and his associates.
Examiners determined that this politically exposed
person and his associates used certain accounts to hide
(or disguise) the beneficial ownership of the funds.
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79
In the Matter of The New York and Miami Branches of Banco de Chile,
No. 2005-3 (Assessment of Civil Money Penalty) (October 12, 2005)
(continued).
A review of the applicable account files and transaction
records determined that management at the Miami
Branch was aware, or should have been aware, that
accounts were opened by a nominee and associate of a
politically exposed person and ultimately owned and
controlled by the prominent politically exposed person.
11/6/2015
80
In the Matter of The New York and Miami Branches of Banco de Chile,
No. 2005-3 (Assessment of Civil Money Penalty) (October 12, 2005)
(continued).
FinCEN concluded that in view of the nature of the
accounts, transactions and activity at both branches
should have clearly been subjected to enhanced due
diligence and more rigorously reviewed and monitored
by management and compliance staff.
FinCEN concluded that although the definition of
politically exposed persons used by the Miami Branch
was in line with regulatory guidance, in practice the
definition was too narrowly applied.
11/6/2015
81
In the Matter of The New York and Miami Branches of Banco de Chile,
No. 2005-3 (Assessment of Civil Money Penalty) (October 12, 2005)
(continued).
FinCEN found that due diligence documentation for large
accounts was considered insufficient and even minimal
documentation for correspondent accounts was not
required by the Miami Branch’s written compliance
program. Policies and procedures did not include
guidance requiring sufficient detail on customer profiles
for large, potentially riskier accounts. Customers with
multiple accounts were not required to have all of their
account relationships identified and reviewed on an
aggregate, risk-graded basis.
11/6/2015
82
In the Matter of The New York and Miami Branches of Banco de Chile,
No. 2005-3 (Assessment of Civil Money Penalty) (October 12, 2005)
(continued).
FinCEN asserted that the Miami Branch failed to
implement an adequate system for independent testing
for compliance with the Bank Secrecy Act. FinCEN also
asserted that the audit scope did not include pertinent
sections of the USA PATRIOT Act, did not adequately
test new account reviews, compliance with the Customer
Identification Program requirements, wire transfer and
cash activity or account monitoring and reviews of
existing accounts (particularly for high-risk accounts) for
adequate due diligence.
11/6/2015
83
In the Matter of The New York and Miami Branches of Banco de Chile,
No. 2005-3 (Assessment of Civil Money Penalty) (October 12, 2005)
(continued).
Raising a segregation of duties issue, FinCEN asserted
that since the compliance officer was, in part,
responsible for both the audit and compliance functions
for both branches, the audit function itself was
compromised in that it was not independent.
FinCEN imposed a $3,000,000 civil money penalty
against Banco de Chile. The Federal Reserve and the
Comptroller of the Currency also imposed civil money
penalties against Banco de Chile.
11/6/2015
84
In the Matter of The Federal Branch of Arab Bank PLC, New York, New
York, No. 2005-2 (Assessment of Civil Money Penalty) (August 17,
2005).
FinCEN found that the New York Branch failed to
implement an adequate system of internal controls to
comply with the Bank Secrecy Act and manage the risks
of money laundering and terrorist financing involving
funds transfers for originators and beneficiaries without
accounts at the New York Branch.
11/6/2015
85
In the Matter of The Federal Branch of Arab Bank PLC, New York, New
York, No. 2005-2 (Assessment of Civil Money Penalty) (August 17,
2005) (continued).
The New York Branch established inappropriate
limitations on the scope of systems and controls to
comply with the Bank Secrecy Act and manage the risks
of money laundering and terrorist financing by focusing
on direct customers of the New York Branch as opposed
to originators and beneficiaries without accounts at the
New York Branch. The New York Branch York extended
transaction monitoring and review to only those
individuals and entities that it viewed as direct
customers.
11/6/2015
86
In the Matter of The Federal Branch of Arab Bank PLC, New York, New
York, No. 2005-2 (Assessment of Civil Money Penalty) (August 17,
2005) (continued).
FinCEN asserted that the New York Branch conducted
manual reviews of spreadsheets containing information
on the funds transfers. However, given the volume of
activity, manual review did not - and could not adequately detect suspicious transactions. Effective
monitoring of the funds transfers required automation. In
2000, the New York Branch decided to develop an
automated monitoring system. To use the system
effectively, the branch needed to, but did not, implement
procedures enabling the system to capture funds
transfers that displayed indicia of suspicious activity by
originators and beneficiaries in funds transfers.
11/6/2015
87
In the Matter of The Federal Branch of Arab Bank PLC, New York, New
York, No. 2005-2 (Assessment of Civil Money Penalty) (August 17,
2005) (continued).
FinCEN asserted that the New York Branch failed to
implement procedures for obtaining relevant information,
from fellow members of the Arab Bank Group or
correspondent institutions, on the potentially suspicious
nature of funds transfers cleared by the branch. Law
enforcement or regulatory authorities had frozen or
monitored accounts at members of the Arab Bank
Group. An adequate system of internal controls should
have included procedures for obtaining this information
on a regular and timely basis, to the extent the New York
Branch cleared funds transfers involving the accounts,
and to the extent obtaining the information proved
appropriate and practical.
11/6/2015
88
In the Matter of The Federal Branch of Arab Bank PLC, New York, New
York, No. 2005-2 (Assessment of Civil Money Penalty) (August 17,
2005) (continued).
For example, during the period from 2000 through 2004,
management of an Arab Bank affiliate in the Palestinian
Territories received, from regulatory authorities in the
Palestinian Territories, orders that focused explicitly on
funds transfers to a number of beneficiaries with
accounts at members of the Arab Bank Group in the
Palestinian Territories.
11/6/2015
89
In the Matter of The Federal Branch of Arab Bank PLC, New York, New
York, No. 2005-2 (Assessment of Civil Money Penalty) (August 17,
2005) (continued).
In addition, regulatory authorities in the Palestinian
Territories issued circulars containing the names of
suspected criminals and ordered institutions holding
accounts of the suspected criminals to either freeze the
accounts or place the accounts on a watch list. Despite
the heightened risk of illicit activity, the New York Branch
failed to implement procedures for obtaining this type of
information from other members of the Arab Bank Group,
to mitigate the risk and ensure compliance with the Bank
Secrecy Act.
11/6/2015
90
In the Matter of The Federal Branch of Arab Bank PLC, New York, New
York, No. 2005-2 (Assessment of Civil Money Penalty) (August 17,
2005) (continued).
Names similar to those of originators and beneficiaries in
funds transfers cleared by the New York Branch
appeared in credible sources of publicly available
information. The sources included Congressional
testimony, indictments in the United States, and wellpublicized research and media reports. Due to the
heightened risks of money laundering and terrorist
financing, the New York Branch should have developed
procedures for utilizing - to the extent appropriate and
practical - publicly available information concerning
beneficiaries and originators, on a risk-assessed basis.
11/6/2015
91
In the Matter of The Federal Branch of Arab Bank PLC, New York, New
York, No. 2005-2 (Assessment of Civil Money Penalty) (August 17,
2005) (continued).
FinCEN also asserted that in a few instances, manual
review of records did lead to the detection of anomalies.
On those occasions where the New York Branch
requested information from other members of the Arab
Bank Group, the New York Branch often accepted
generic replies, indicating merely that the members knew
their customers - replies that did not provide an
adequate basis for determining whether the funds
transfers had a business or lawful purpose.
11/6/2015
92
In the Matter of The Federal Branch of Arab Bank PLC, New York, New
York, No. 2005-2 (Assessment of Civil Money Penalty) (August 17,
2005) (continued).
Some originators or beneficiaries appeared in
subpoenas or other legal process that the branch
received from law enforcement in the United States.
FinCEN concluded that the New York Branch failed to
identify a number of potentially suspicious funds
transfers.
11/6/2015
93
In the Matter of The Federal Branch of Arab Bank PLC, New York, New
York, No. 2005-2 (Assessment of Civil Money Penalty) (August 17,
2005) (continued).
FinCEN asserted that during the period from 2001
through 2004, the New York Branch cleared funds
transfers for originators or beneficiaries that OFAC or the
Department of State later designated as "specially
designated terrorists," "specially designated global
terrorists," or "foreign terrorist organizations.“
11/6/2015
94
In the Matter of The Federal Branch of Arab Bank PLC, New York, New
York, No. 2005-2 (Assessment of Civil Money Penalty) (August 17,
2005) (continued).
At the time of the funds transfers, neither OFAC nor the
Department of State had designated the originators or
beneficiaries. Once a designation occurred, the branch
failed to review recent activity, occurring prior to the
designation and associated with the designated entities,
to identify potentially suspicious activity.
11/6/2015
95
In the Matter of The Federal Branch of Arab Bank PLC, New York, New
York, No. 2005-2 (Assessment of Civil Money Penalty) (August 17,
2005) (continued).
Had such a review been conducted, it would have
uncovered originators and beneficiaries – with possible
ties to the designated entities – that had recently
engaged in potentially suspicious activity. The branch
failed to review information in its possession that would
have shown it was clearing funds transfers for individuals
and entities dealing with subsequently designated
terrorists and terrorist organizations, failed to analyze
this information, and failed to file suspicious activity
reports.
11/6/2015
96
FinCEN Enforcement Action: In the Matter of The Federal Branch of
Arab Bank PLC, New York, New York, No. 2005-2 (Assessment of Civil
Money Penalty) (August 17, 2005) (continued).
FinCEN asserted that while a subpoena from law
enforcement does not represent, in and of itself, cause
for filing a suspicious activity report, the subpoena is an
important piece of information that places a financial
institution on notice of the need to conduct a further
review of accounts or activity involving the subject of the
subpoena to identify potentially suspicious activity. The
New York Branch failed to conduct such reviews.
FinCEN imposed a $24,000,000 civil money penalty
against Arab Bank. The OCC also imposed a civil
money penalty against Arab Bank.
11/6/2015
97
In the Matter of Riggs Bank, N.A., No. 2004-01
(Assessment of Civil Money Penalty) (May 13, 2004).
FinCEN concluded that Riggs’ system of internal
controls was inadequate to ensure ongoing
compliance with the Bank Secrecy Act across all
business lines. Riggs’ internal controls were not
designed to take into account the exposure posed by
the customers, products, services, and accounts from
high-risk international geographic locations that are
commonly viewed as high-risk for money laundering.
Indeed, Riggs’ internal controls proved insufficient to
detect and monitor risk, or to alert the bank to the
need to take preventive or corrective action when the
risk materialized.
11/6/2015
98
In the Matter of Riggs Bank, N.A., No. 2004-01
(Assessment of Civil Money Penalty) (May 13, 2004)
(continued).
Riggs did not implement an effective system to
identify and assess the BSA/AML risk present
throughout the institution. The risk matrices used in
some of Riggs’ divisions all contained similar criteria,
rather than being tailored to the particular lines of
business on a risk-graded basis, which weakened
their effectiveness. As a result, management was
unable to define and analyze concentrations of risk in
the accounts, customers, locations, and products of
Riggs.
11/6/2015
99
In the Matter of Riggs Bank, N.A., No. 2004-01
(Assessment of Civil Money Penalty) (May 13, 2004)
(continued).
FinCEN asserted that Riggs’ customer due diligence
program was weak and was not implemented in an
effective or consistent manner. Certain areas of Riggs
failed to acquire or to use the bank’s account opening
and customer activity information collection
procedures. Customer due diligence information
required by Riggs’ policies and procedures was
frequently missing. As a result, Riggs failed to identify
a large number of accounts associated with the
governments of two foreign countries. Riggs’
enhanced due diligence policies and procedures
governing high-risk areas were weak or, in some
cases, nonexistent.
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100
In the Matter of Riggs Bank, N.A., No. 2004-01
(Assessment of Civil Money Penalty) (May 13, 2004)
(continued).
High-risk areas include high-risk transactions such as
transactions payable upon proper identification, highrisk customers such as check cashers and money
remitters, and accounts involving high-risk
international geographic locations including
international private banking, embassy banking,
politically exposed persons, and non-resident aliens.
On two occasions, although Riggs’ management said
that the institution had discontinued PUPID
transactions, Riggs allowed the transactions to
continue.
11/6/2015
101
In the Matter of Riggs Bank, N.A., No. 2004-01
(Assessment of Civil Money Penalty) (May 13, 2004)
(continued).
FinCEN asserted that Riggs also failed to implement
adequate internal controls to ensure the identification
of suspicious transactions and the timely filing of
complete suspicious activity reports on reportable
transactions. Riggs did not effectively use procedures
and automated technology already in place to identify
and review suspicious cash, monetary instruments, or
wire activity.
11/6/2015
102
In the Matter of Riggs Bank, N.A., No. 2004-01
(Assessment of Civil Money Penalty) (May 13, 2004)
(continued).
Riggs did not have procedures or internal controls to
ensure that subpoenas and other government
requests regarding accountholders were referred to
the division responsible for investigating potential
suspicious activity.
11/6/2015
103
In the Matter of Riggs Bank, N.A., No. 2004-01
(Assessment of Civil Money Penalty) (May 13, 2004)
(continued).
Internal controls were lacking in Riggs’ management
of its largest banking relationship, which involved the
accounts of a foreign government, its politically
exposed persons, and the companies owned by such
persons. There was insufficient staff and procedures
to monitor the accounts and a lack of oversight over
the account relationship manager and his staff. These
problems continued even after numerous warning
signs indicated that Riggs needed to take corrective
action.
11/6/2015
104
In the Matter of Oppenheimer & Company, New York, New York, No.
2005-04 (Assessment of Civil Money Penalty) (December 29, 2005).
FinCEN and the New York Stock Exchange commenced
this civil money penalty action against Oppenheimer &
Company, a broker dealer, in part, based on its violation
of the Bank Secrecy Act and New York Stock Exchange
(“NYSE”) Rule 445, which violations were discovered
during a joint examination by the Securities and
Exchange Commission and the NYSE. FinCEN and the
NYSE imposed a $2,800,000 civil money penalty against
Oppenheimer.
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105
Troutman Sanders LLP AML and Terrorist
Financing Compliance Team Partners.
Roscoe Howard
Elliott Cohen
Jake Lutz
Nathan Muyskens
Mark Nagle
Stuart Pierson
Thomas Powell
Daniel Seikaly
Jerome Walker
11/6/2015
202-274-2960
212-704-6245
804-697-1490
202-274-2900
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404-885-3294
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212-704-6286
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