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Subcommittee Examines the BSA/AML Regulatory Compliance Regime
Thursday, June 29, 2017 6:45 AM

The Financial Institutions and Consumer Credit Subcommittee held a hearing Wednesday to examine the federal government’s anti-money laundering (AML) efforts under the Bank Secrecy Act (BSA). The primary focus of the hearing was to understand compliance challenges facing financial institutions, including compliance trends, the effectiveness of current reporting requirements, and opportunities to improve and enhance the federal government’s ability to combat money laundering and terrorist financing.

“The goals of the Bank Secrecy Act and anti-money laundering legal regime are laudable: financial institutions and government agencies should work together to prevent money laundering and terrorist financing,” said subcommittee Chair Blaine Luetkemeyer (R-Mo.). “However, aspects of this regulation have spiraled out-of-control and resulted in a breakdown between law enforcement, financial regulators, and institutions. The de-risking seen throughout the financial services space, in part because of BSA/AML regulation, actually increases risk to the system. We cannot afford to have an ineffective BSA/AML regime. Today’s hearing is the first step in a series to discuss improvements that could benefit law enforcement and financial institutions, while simultaneously creating a more effective BSA/AML regulatory construct.”

Key Takeaways from the Hearing:

  • The consequences of money laundering are significant to both financial systems and governments worldwide.
  • The BSA and the U.S. economic sanctions regime impose substantial compliance burdens on financial institutions, especially smaller financial institutions with limited staffing and resources.
  • The Federal government has an important mission in combatting money laundering and terrorist financing, but efforts to improve outcomes while reducing unnecessary costs should be considered.

Testifying on behalf of CUNA, Faith Lleva Anderson, SVP and general counsel for American Airlines Credit Union, said, “While credit unions support laws and regulations that prevent terrorists and criminals from using their institutions to launder money or otherwise engage in illegal activity, the compliance burden of the current regulatory environment often unnecessarily takes away from our ability to serve our members. Since the 2008 economic crisis and the resulting regulations that followed, credit unions have been required to devote more resources for regulatory and legal compliance particularly for mortgage loans and other consumer products, services, and protections. Given these new requirements, it has become difficult for credit unions to absorb their current total compliance burden. The new regulatory regime makes Bank Secrecy Act and Anti-Money Laundering regulatory compliance even more daunting.”