October 1, 2018

Guidance AML guidance does not have the force of laws, bank regulators say in rare multi-agency guidance

Posted by: Brian Monroe

The top banking agencies of the United States, in conjunction with the U.S. Treasury, this month attempted to delineate more clearly what banks should do in crafting financial crime compliance programs related to following laws, regulations or guidance – a likely response to widespread criticism in the recent implementation of new rules to capture beneficial ownership details.

Regulators, including the Office of the Comptroller of the Currency and Federal Reserve, likely issued the guidance on supervisory guidance recently to address industry criticisms that examiners can fault bank anti-money laundering (AML) programs solely on their subjective interpretation of already murky guidance. To read ACFCS coverage of the guidance, click here.

Specifically, the statements are likely related to the industry debacle that occurred in the aftermath of the recent U.S. Treasury’s Financial Crimes Enforcement Network’s (FinCEN) beneficial ownership rule coming into effect.

At issue was that just weeks before the May 11, 2018 deadline, FinCEN released dozens of questions and answers (Q&As), which in some ways contrasted with perceived expectations and current regulations – forcing the financial sector to choose between which one to follow.

Some other key areas regulators worked to clarify in the recent guidance:

·         Ø  The agencies intend to limit the use of numerical thresholds or other “bright-lines” in describing expectations in supervisory guidance.

·         Ø  Examiners will not criticize a supervised financial institution for a “violation” of supervisory guidance. Rather, any citations will be for violations of law, regulation, or non-compliance with enforcement orders or other enforceable conditions.

·         Ø  The agencies will aim to reduce the issuance of multiple supervisory guidance documents on the same topic and will generally limit such multiple issuances going forward.

·         Ø  The agencies will continue efforts to make the role of supervisory guidance clear in their communications to examiners and to supervised financial institutions.