Updated: Jan 2, 2020
As evidenced by ongoing legislative activity and regulatory enforcement, 2019 was an active year in terms of Bank Secrecy Act/anti-money laundering (AML) and sanctions compliance. Regulators and law enforcement devoted increased attention and resources to AML-related matters, and Congress continues to debate BSA reform into 2020.
The following are among some of the most notable developments and key take-aways from the past year:
2019 was a record-setting year for AML-related fines
The amount of AML fines levied in 2019 tops $ 7.7 billion USD
Banks received the majority of the AML penalties issued
US regulators were the most active, followed by UK regulators
No AML fines were issued by regulators in Asia, Africa, Latin America, or Oceania in 2019
Of the 11 US regulators issuing AML-related fines & penalties, the DOJ was the biggest enforcer
The largest AML scandals of 2019 involved global banks, including Standard Chartered, Deutsche Bank, UBS, and Danske Bank
In April 2019, the DOJ issued updated guidance on corporate compliance programs - the focus of which was on program effectiveness
In May 2019, OFAC issued, for the first time, a framework for sanctions compliance programs, and has referenced this framework in subsequent enforcement actions
2019 saw a record number of OFAC civil penalties/settlements (26) as well as a record total of penalties/settlements ($1,289,027,059 USD)
In August 2019, FinCEN established a new division, the Global Investigations Division, to oversee foreign and domestic investigations, indicating this is an area of high priority
Corporate transparency and the disclosure of beneficial ownership information for corporate entities was a big focus for legislators:
The Corporate Transparency Act of 2019 passed the House (and is up for Senate vote)
The ILLICIT Cash Act was also introduced in 2019
Financial regulators also focused on corporate transparency - the Director of FinCEN called for a beneficial ownership registry.
The BSA/AML and sanctions compliance program activity in 2019 provides critical insight into what 2020 is likely to bring. It should be expected that the heightened attention and enforcement seen in 2019 will continue, and the adequacy and effectiveness of BSA/AML programs in particular will be a major focus of both regulators and law enforcement going forward in 2020. Therefore, a fundamentally sound BSA/AML program and a strong control environment around targeted risk areas will be one of the most effective ways for financial institutions and others to minimize regulatory scrutiny. Moreover, transparency regarding beneficial ownership and source of funds are two key areas that will continue to receive attention in the coming year.