21 October 2017
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The Clearing House calls for overhaul of AML practices

17 February 2017  |  6644 views  |  0 cash

US bank lobby group The Clearing House has called for an overhaul of how its members deal with AML requirements, arguing that they should spend less time and money on submitting suspicious activity reports and instead concentrate on using more innovative methods to thwart money laundering and terrorist financing.

In a report based on feedback from bankers, fintech CEOs, law enforcement staffers and lawyers, the trade association says that, between them, big banks currently spend billions of dollars a year on AML compliance and that much of this is of limited benefit to authorities.

The report says that much more should be done by the US Treasury Financial Crimes Enforcement Network (FinCEN), which should also reclaim sole supervisory authority in money laundering from a host of different agencies.

Currently, banks are required to send FinCEN suspicious activity reports (SARs). These often require significant time and energy from bank staff, yet many of them "may never be read", says the report.

The FinCEN e-filing system needs an overhaul, according to the authors, with banks simply sending raw data, something which technology now allows the regulator to parse while maintaining privacy.

This would free up resources at the banks for work at their 'financial intelligence units' (FIUs). Often staffed by ex-law enforcement officials, FIUs are being set up by banks to develop new methods to tackle money laundering.

These units should be given "latitude" by regulators to operate outside the compliance regime in a sandbox, giving them the ability to evaluate client relationships and adapt in real-time to developing threats, says the report.

Read the full report (PDF)

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