To Be Forwarned...
By Barbara E. Hurst, Editor
We have all tried to do everything we can to anticipate and adjust to the changes made necessary after the terrorist attacks on our country on September 11. Nowhere has that effort been more complicated than in the banking industry.
The effects of The USA Patriot Act of 1991 have only begun to be felt, and many of the people who will be the most affected by the changes may not realize the sword of Damocles is hanging over their head.
There are three positions particularly vulnerable - the compliance officer, the security officer, and the training personnel. (Heaven help you if you are all three!)
H. Rodgin Cohen, a veteran banking industry lawyer and chairman of the New York law firm of Sullivan & Cromwell was quoted in the American Banker from a speech he gave to the N.C. School of Law. He said, "The Patriot Act includes several anti-money laundering provisions designed to stop terrorist financing, and will prove to be a watershed event for banks, as well as numerous other financial institutions - not only because of its requirements, but the zealous enforcement that is expected to accompany them.
"A bank involved in money laundering or terrorist funding in the future could find its very existence threatened. This threat is a felony conviction...and the loss of FDIC insurance."
He continued, "This threat will arise if an account at a financial institution is used for money laundering or terrorist funding, even if there is no direct participation by employees at the financial institution. The financial institution may not be able to escape criminal charges unless it can demonstrate that its anti-money laundering procedures were state-of-the-art, and they were implemented effectively."
I've been following the regulations coming out of the Patriot Act closely, and am concerned enough at this point that we've changed the agenda of our workshop. In addition to a short "free-for-all" in the first session, I will be addressing, in detail, the changes and requirements spawned by the Patriot Act that will be out by September - including Section 326 having to do with mandatory identification. John Byrne and Peter Djinis will also be addressing the changes during their session.People involved with examiner training tell me all of the agencies are gearing up for in-depth BSA, OFAC, and Patriot Act compliance during examinations. Add to all your other duties the serious responsibility of being sure ALL your employees are aware of what is required. The very continued existence of your financial institution may depend on their knowledge and compliance.
Copyright © 2002 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 12, No. 3, 4/02
First published on 04/01/2002