Legal Alert

Lessons Learned: Case Studies in Recent OCC Anti-Money Laundering Enforcement

April 2, 2020

The latest Consumer Finance Monitor podcast examines two recent OCC consent orders involving alleged Anti-Money Laundering (AML) failings—one with a bank, and another with an individual in-house professional.

A review the OCC’s allegations underlying these two orders shows how the OCC focuses on the core pillars of BSA/AML compliance and its own internal criteria when deciding whether to use its discretion to pursue enforcement. The consent orders also contain lessons for boards and management of financial institutions when choosing to accept higher-risk customers, including customers involved in the digital currency industry. Although it is certainly possible for a financial institution to accept and manage some higher-risk customers, the appropriate AML policies and programs must be in place—and effectively executed.

Another critical issue raised in the cases is AML liability risk for individuals—including how individual risk can be minimized, but also the inherent tension between the interests of institutions and the interests of their individual executives and compliance officers when the government comes calling. This tension can lead to institutions unfairly blaming individuals, but also to individuals acting in overly defensive ways. Of course, this tension exists not only for BSA/AML compliance, but whenever a corporation faces a significant legal and/or compliance problem.

The consent orders also provide guidance on use of third-party consultants and advisers for AML compliance. Ironically, consultants can be a double-edged sword for financial institutions and individuals facing possible downstream enforcement actions. Although the work product of consultants and advisers can produce improved compliance and lower overall risk—and BSA/AML compliance in fact demands independent auditing—internal reports also can become the weapons of would-be whistleblowers and government enforcement staff.  This is particularly true if the consultant is predisposed to find problems anywhere, or—conversely and ironically—if the consultant is regarded by the government as incompetent.

If you would like to remain updated on these issues, please click here to subscribe to Money Laundering Watch. Ballard Spahr’s Anti-Money Laundering Team tracks industry developments and advises on BSA/AML compliance.

Copyright © 2020 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

Subscribe to Ballard Spahr Mailing Lists

Get the latest significant legal alerts, news, webinars, and insights that affect your industry.