The recent enforcement action against Bank of America by the Office of the Comptroller of the Currency (OCC) highlights the significant regulatory pressures financial institutions face in ensuring robust Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance. The OCC’s cease-and-desist order, issued on December 23, targets severe deficiencies in Bank of America’s BSA and sanctions compliance programs. These deficiencies include delays in suspicious activity reporting and unresolved due diligence issues. The order mandates that Bank of America enhance its internal controls, independent testing, governance, and training aspects within its BSA compliance programs. Additionally, the bank must hire an independent consultant to evaluate these programs and review its history of suspicious activity reports.
This recent move by the OCC is part of a broader regulatory effort to ensure that financial institutions are meticulously following BSA/AML requirements. Bank of America revealed in an October filing that it had been in discussions with regulatory authorities about its BSA compliance, hinting that enforcement actions could be imminent. Despite these discussions and the eventual enforcement action, Bank of America remains confident that the issues will not have a significant financial impact on the institution. The bank has underscored its ongoing collaboration with the OCC to address and rectify these compliance problems, striving to improve its practices and controls systematically.
Broader Regulatory Trends and Compliance Challenges
The enforcement action against Bank of America is emblematic of an intensifying regulatory focus on BSA/AML compliance across the banking industry. This trend is not isolated; it forms part of a concerted effort by regulatory bodies to identify and rectify lapses in ensuring financial integrity. Another high-profile case involving TD Bank, which was embroiled in a Justice Department investigation, resulted in the bank facing substantial penalties and restrictions. The investigation uncovered TD Bank’s involvement in significant money laundering operations linked to an illicit fentanyl ring, culminating in over $3 billion in fines and operational restrictions within the U.S. retail sector.
This heightened regulatory scrutiny isn’t confined to large financial institutions alone. Recent months have seen enforcement actions targeting both sizable and smaller establishments, including Wells Fargo, Axiom Bank, and Small Business Bank. These efforts highlight a stringent regulatory environment where the focus remains on ensuring all financial entities, regardless of size, maintain stringent AML and BSA compliance standards. The overarching goal is to deter financial crimes, including money laundering, by strengthening institutional safeguards and fostering a transparent operational ecosystem.
The Imperative of Robust Compliance Practices
The recent action by the Office of the Comptroller of the Currency (OCC) against Bank of America underscores the substantial regulatory pressure on financial institutions to comply with the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) standards. On December 23, the OCC issued a cease-and-desist order addressing major deficiencies in Bank of America’s BSA and sanctions compliance programs, particularly delays in suspicious activity reporting and unresolved due diligence concerns. The order requires Bank of America to strengthen its internal controls, independent testing, governance, and training within its BSA compliance programs. Additionally, the bank is mandated to hire an independent consultant to review these programs and assess its history of suspicious activity reports.
This action is part of a larger regulatory push to ensure stringent adherence to BSA/AML requirements. In an October filing, Bank of America disclosed ongoing discussions with regulators about its BSA compliance, indicating that enforcement actions might follow. Despite these developments, Bank of America is confident that these issues will not materially impact its financial standing. The bank is actively cooperating with the OCC to systematically address and resolve the compliance deficiencies, striving for continuous improvement in its practices and controls.
