Recent enforcement trends suggest that financial institutions now face more regulatory scrutiny in connection with alleged violations of Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) regulations than ever before. Federal regulators have imposed more than $5 billion in civil money penalties, fines, and forfeitures ("monetary penalties") against financial institutions with respect to BSA/AML violations since the Patriot Act was enacted at the end of 2001. In this NERA paper, Christopher Laursen, Senior Vice President and Chair of NERA's Financial Institutions and Banking Practice, examines trends in BSA/AML enforcement between 2002 and 2014 and implications for associated litigation.
Two-thirds of all BSA/AML enforcement actions since 2012 have included monetary penalties, compared to less than half from 2002 through 2011. In addition, penalties, in both absolute terms and as a portion of firm capital, have grown substantially over time. More than $4.1 billion, or 80% of the total monetary penalties imposed since 2002, have been levied since 2012. Increases in regulatory investigations and enforcement actions come despite a nearly five-fold increase in filings of Suspicious Activity Reports since 2002.
Given regulators' recent enhanced scrutiny over BSA/AML compliance, Mr. Laursen notes, it is expected that the number of regulatory enforcement actions and private lawsuits will continue their increasing trend. As a result, financial institutions should be prepared for enforcement actions targeting a broader scope of violations going forward.
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