Updating Compliance

• NCJ Number: 135521
• Journal: Money Laundering Law Report Volume: 2 Issue: 6 Dated: (January 1992) Pages: 1,4-5
• Author(s): D Newcomb
• Date Published: 1992
• Length: 3 pages
• Publication Format: Article
• Publication Type: Legislation/Policy Analysis
• Language: English
• Country: United States of America

Annotation

Recent criminal law developments suggest that financial institutions should conduct timely compliance program reviews in order to detect and prevent money laundering.

Abstract

The number of programs to prevent money laundering by financial institutions has grown due to increasing concern about the use of legitimate financial channels by criminals to launder the proceeds of crime. Federal Guidelines for Sentencing Organizations establish a comprehensive minimum standard for an effective compliance program. If a financial institution's current compliance program does not meet this minimum standard, management may be lulled into a false sense of security. Program review should start with an examination of the institution's most recent activity as it compares with standards of its existing compliance program. Information should be obtained about accounts and transactions involved in Currency Transaction Reports, Currency and Monetary Instrument Reports, Suspicious Transactions Reports, and subpoenas in money laundering investigations. The next review step should compare the existing compliance program with Commentary to the Sentencing Guidelines for Organizations. These guidelines reduce sentences for organizations with effective compliance programs, and the Commentary discusses minimum elements of an effective program. Since 1987, compliance programs of federally-insured depository institutions have been required to provide training for appropriate personnel. Financial institutions are also required to designate an individual or individuals responsible for coordinating and monitoring day-to-day compliance. Banking regulations further require a system of internal controls to assure ongoing compliance. Federal guidelines require four elements not expressly stated in current banking regulations: disciplinary mechanisms, a reporting system, employee screening procedures, and modification procedures.