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Regulatory Burden BSA Style
There's been a lot of complaining about regulatory burden recently. And it is pretty easy to complain about regulatory burden because there is so much of it. But the complaints about burden are without focus and without thoughts about alternatives. Could that be why not much has changed?
Too often, the only focus of regulatory burden has been to complain about it. The complaints stand alone. Anyone who has ever spent much time with a toddler knows that complaining can wear thin fast. We tolerate it as part of the growing process, but look forward to a day when the toddler outgrows the complaints.
How does the financial industry outgrow its complaints about regulatory burden? As long as there is regulatory burden, there will be complaints. That leaves us with a prospect of never growing beyond the complaining stage.
Why do we complain? In particular, why do we complain about the burdens of BSA reporting and programs?
Anyone who complains does so at the risk of ignoring several important issues. First, some procedures are burdensome because they aren't designed to be easily performed in the institution. The performance requirements may be the largest component of the burden. This is fixable to some extent.
But the most important issue to consider is the alternative to the regulatory burden and the program it represents. What happens if we eliminate the Bank Secrecy Act and all that goes with it? Think about those consequences before you complain.
Imagine a system (or lack thereof) in which law enforcement investigators could not track the flow of drug money, could not identify accounts or even locations where money is being moved. Imagine an unrestricted wire system with funds moving freely and anonymously all around the globe. Imagine a financial system that allows terrorists to amass, transmit, withdraw and use funds to do harm to our people and our infrastructure.
What we get, if we really mean to reduce burden or eliminate burden under the Bank Secrecy Act, is a world without the World Trade Center, a world where drugs are sold and money is moved freely. Is this what anyone means when they complain about regulatory burden? Clearly not!
So what do we want when we complain about regulatory burden? We want two things: an easier system and recognition for our hard work. The easier system will only happen if financial institutions do more than complain. They must make constructive suggestions. The regulatory agencies have indicated that they are open to suggestions. Although the process is slow, they have responded.
Recognition for our hard work is a slightly different matter. We have asked law enforcement how many SARs and CTRs led to prosecutions. We have asked to be contacted when we file a particularly significant SAR. It is natural to want a pat on the back for good work - in this case a good catch of a bad person.
But what happens if law enforcement actually does tell us exactly what happened to those SARs we filed? The investigation is compromised, that's what!
This is something we have to take on trust. We need to believe law enforcement when they tell us that CTRs and SARs are valuable to their efforts. Asking for details undermines the goals we all share. And providing details would take time away from an investigation. We need to look instead at the fact that nothing serious has happened in this country since 9/11. That's in part the result of our work. So pat yourself on the back every day that nothing happens.
Copyright © 2005 Compliance Action. Originally appeared in Compliance Action, Vol. 10, No. 13, 11/05
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