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BSA/AML Penalties Are Rising — and Getting Personal

Post Categories: Blog

By: Dan Frechtling, SVP of Marketing and Chief Product Officer 


The Financial Crimes Enforcement Network (FinCEN) has issued an interim final rule raising statutory fines for violating the Bank Secrecy Act (BSA). In some cases the maximum penalty amounts or ranges have doubled. This creates added urgency for banks to improve KYC.


Many increases take effect for penalties assessed after August 1. The change occurs against a backdrop of rising personal liability for compliance practitioners. As a result, the combination of the two trends will raise costs for BSA/AML officers.


BSA lapses become more expensive

The Federal Civil Penalties Inflation Adjustment Improvements Act of 2015 obligated the US Executive Branch and independent agencies to increase penalties on an annual basis commensurate with inflation. However, an immediate jump is compelled by a “catch-up” formula set forth in the Act.


It has been a decade or more since FinCEN increased its Civil Money Penalties (CMPs). The National Law Review provides a few examples of the escalations:

  • record keeping violations for funds transfers, which has increased from $10,000 to $19,787;
  • failure to register as a money transmitter, which has increased from $5,000 to $7,954; and
  • willful violations of BSA requirements, which has increased from a range of $25,000–$100,000 to a range of $53,907–$215,628.


There are ripple effects among other regulatory bodies. The Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Commission (FDIC) will implement similar “catch-up” CMP adjustments. The jumps may be shallower than FinCEN’s because they have made CMP corrections more recently. But others may take a cue as well, including the New York Department of Financial Services.


Access the full text of the statute here.


Personal liability for BSA/AML deficiencies

But this is not the only sign of higher penalties for BSA/AML violations. A full 94% of attendees at a Thomson Reuters Customer Summit in New York said they expect personal liability of compliance officers to increase in the next year.


These concerns are well founded. Individual compliance officers who were fined in recent years, include:

  • $1 million charged to the Chief Compliance Officer of Moneygram for failing to ensure his employees followed BSA/AML rules
  • $75,000 charged to the Chief Compliance Officer (Foreign Currency Trading) of FX Direct Dealer for failing to supervise his firm’s AML program
  • $25,000 and a one-month suspension applied to the Global AML Compliance Officer of Brown Brothers Harriman & Co for failing to maintain an adequate AML program
  • £29,500 charged to the Compliance Officer and an internal auditor of Bank of Beirut (UK subsidiary) for failing to co-operate with a regulator


Compliance officers now face a lethal combination of fine inflation and individual targeting. The increase in regulatory pressure is why G2 KYC Solutions were created. Alleviate regulatory burden, reduce risk and operate more efficiently.


See how G2 Web Services can help you improve KYC and KYCC.


See how our solutions can help you.

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