FDIC Chair Martin Gruenberg addressed some of the key challenges faced by financial institutions in carrying out compliance programs related to money laundering and terrorist financing. In remarks to the Case Western Reserve University School of Law Financial Integrity Institute, Chair Gruenberg recounted events leading up to the enactment of the Bank Secrecy Act ("BSA") and the USA PATRIOT Act, and the establishment of the Financial Crimes Enforcement Network ("FinCEN"). He discussed the FDIC's role in maintaining financial integrity, which includes on-site examinations and off-site monitoring to evaluate an institution's compliance with the Bank Secrecy Act.
Spotlighting the importance of both a "culture of compliance" and internal controls, Chair Gruenberg stated that senior managers need to demonstrate strong corporate governance and provide for ongoing training. Deficiencies in these areas, he said, have historically resulted in noncompliance with anti-money laundering ("AML") rules and opportunities for insider abuse. Most BSA/AML compliance programs are effective and allow for timely and comprehensive filings of currency transaction and suspicious activity reports, he said.
Chair Gruenberg emphasized that "efforts to combat financial crime are costly to undertake," but also stressed the broader importance of the collective effort:
"The evolving international and cyber dimensions of financial crimes further these challenges as money launderers, terrorist financiers, and other illicit actors use creative and increasingly sophisticated methods to adapt to changes in the financial, technological, and regulatory landscape. Going forward, lawmakers, regulators, and the financial industry will need to remain vigilant in our efforts to detect and prevent money laundering and other forms of financial crime, and balance the benefits of enforcement against the costs."
Chair Gruenberg noted international efforts to combat financial crime including the Financial Action Task Force on Money Laundering ("FATF") and the privately operated Wolfsberg Group. He provided examples of technological advancements that may expose the industry to the risk of financial crime and noted that these advancements also can provide opportunities to better manage those risks and monitor suspicious activities.
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