Case Studies in Recent OCC AML Enforcement, and Lessons Learned: A Podcast

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We are pleased to offer the latest episode in Ballard Spahr’s Consumer Financial Monitor Podcast series — a weekly podcast focusing on the consumer finance issues that matter most, from new product development and emerging technologies to regulatory compliance and enforcement and the ramifications of private litigation.

In this podcast, we examine two recent OCC consent orders involving alleged Anti-Money Laundering (“AML”) failings — one with a bank, and another with an individual in-house professional.  Specifically, we review the OCC’s allegations underlying these two orders, and discuss how the OCC focuses on the core pillars of BSA/AML compliance and its own internal criteria when deciding whether to use its discretion to pursue enforcement.  We also discuss the practical takeaways for boards and management of financial institutions when choosing to accept higher-risk customers, including customers involved in the digital currency industry.  Although it is certainly possible for a financial institution to accept and manage certain higher-risk customers, the appropriate AML policies and programs must be in place, and effectively executed.

We further discuss the critical issue of AML liability risk for individuals – including how such individual risk can be minimized, but also the inherent tension between the interests of institutions, and the interests of their individual executives and compliance officers, when the government comes calling.  This tension can lead to institutions unfairly blaming individuals, but also to individuals acting in overly-defensive ways.  Of course, this is a tension that exists not only in the realm of BSA/AML compliance, but also when any significant legal and compliance problems face a corporation.

Finally, we discuss how the use of third-party consultants and advisors regarding AML compliance can serve, perversely, as a double-edged sword for financial institutions and individuals facing possible downstream enforcement actions.  Although the work product of consultants and advisors can produce improved compliance and lower overall risk — and BSA/AML compliance in fact demands independent testing — internal reports also can become the weapons of would-be whistleblowers and government enforcement staff.  This is particularly true if the consultant is pre-disposed to find problems anywhere, or — conversely and ironically — if the consultant is regarded by the government as incompetent.

We hope that you enjoy the podcast, moderated by our partner Chris Willis, and find it useful.

If you would like to remain updated on these issues, please click here to subscribe to Money Laundering Watch. To learn more about Ballard Spahr’s Anti-Money Laundering Team, please click here.  To visit Ballard Spahr’s award-winning Consumer Financial Monitor blog, please click here.