ACAMS: Financial Crimes Under the Microscope
We recently sat in on an Association of Certified Anti-Money Laundering Specialists (ACAMS) webinar that addressed many of the rising issues related to the COVID-19 pandemic. They expect banks to see more online banking/mobile banking usage, as well as uncharacteristic transactions for certain customers.
These changes in customer behavior will ultimately result in increased transaction alerts within your BSA monitoring systems. This might include spikes in online banking, mobile banking, person to person (P2P) transfers, wires, etc. You’ll likely want to take a risk-based approach to handling such increases and that approach could also depend on your Business Contingency Plan (BCP). For instance, where does your BCP allocate your compliance resources? Perhaps your BCP calls for more resources, but in the event of the COVID-19 pandemic, you have actually had to reduce resources/personnel. Any necessary adjustments to your BCP should be documented and if you don’t have a BCP, develop one!
Some areas where you may or should see a change include:
- Bars and restaurants are generally closed to the public. Even though they may be operating on a take-out only basis, their overall activity should be decreasing. Even as they start to reopen, activity should still generally be less. If they continue to have “normal”, pre-COVID-19 activity, you need to determine why.
- Measures to prevent the spread of the virus have disrupted not only legitimate businesses, but illicit ones also. Those using bars, restaurants, salons, clubs and other business “fronts” for laundering ill-gotten funds must now find different covers. For example, human traffickers can’t openly operate front businesses like massage parlors; money couriers/mules will now stand out because of the decrease in air and interstate travel, etc. Businesses will be created, or compromised, in order to support activities and hide income derived from COVID-19 fraud schemes.
- Customers who have never used certain products or services (e.g., mobile banking, wire, P2P, etc.) will likely start doing so. You will need to determine if it’s normal given the times or unusual.
- Withdrawals of cash will likely increase due to fear or uncertainty in the economy. People may feel safer keeping cash at home or on-hand. It may be best to come up with a standard way of handling these requests IF other suspicious activity, such as structuring, is not involved. That way, activity analysts can address the increased alerts efficiently.
You might consider developing an NAICS list or AML monitoring scenario of restricted businesses. Continued activity could indicate illicit income from businesses that should be shut down during the pandemic.
This increase in alerts means more information to wade through. This is also challenging because you may not be working with a full staff at this time. Modifying your alert scenarios and thresholds temporarily might help reduce the volume but you should have controls and documentation in place prior to doing so, if it’s not addressed in your BCP. Make sure you have a change control process in place.
Alert thresholds should not be changed on a whim and you’ll likely want some approval process (BSA Officer) in place to do so. For example, IT should not be changing any sanctions alerts due to increased activity going through the financial system to support certain countries. Pay close attention to changes in sanctions and sign up for sanction alerts and issuances.
Be careful too about turning certain alerts off entirely as things will likely get missed. A better approach might be to do a delayed review, for example, every 90 days instead of every 30 days or an abbreviated review vs. a full review.
Ultimately, you need to focus on your program as a whole. Make sure it’s working, be realistic about what you can and can’t do, etc. Communicate with your regulators, especially if you’re unsure of your ability to meet reporting timeframes, etc. Your focus should be on your adaptability, resiliency and sustainability, not “pleasing” your examiners.
Published
2020/05/13
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David Dickinson
David’s banking career began as a field examiner for the FDIC in 1990. He later became a Compliance Officer and Loan Officer for a small bank. In 1993, he established Banker’s Compliance Consulting. Along with his amazingly talented Team, he has written numerous compliance articles for prestigious banking publications and has developed compliance seminars that Banker’s Compliance Consulting produces.
He is an expert in compliance regulations. He is also a motivational speaker and innovative educator. His quick wit and sense of humor transforms the usually tiring topic of compliance into an enjoyable educational experience. David is on the faculty of the American Bankers Association National Compliance Schools and has served on the faculty of the Center for Financial Training for many years. He also is a frequent speaker at the ABA’s Regulatory Compliance Conference. He is also a trainer for hundreds of webinars, is a Certified Regulatory Compliance Manager (CRCM) and has been a BankersOnline Guru for many years. The American Bankers Association honored David with their Distinguished Service Award in 2016.
David and his wife Karen have three adult children, four grandchildren (none of whom live at home!) and two cats (of which Dave is allergic … the cats, not the children!). They recently moved to an acreage outside of Lincoln, Nebraska where he gets to play with his tractor. When possible David can be found fishing, making sawdust in his shop, or playing the guitar and piano. He also enjoys leading worship at his church.