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AML and Community Banks

Question: 
The Bush administration has unveiled a new strategy against money laundering, targeting big illicit operations that could be used by terrorist groups. How will the emphasis on money laundering implications affect community banks on a state and local level?
Answer: 

Answer by John M. Floyd:
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When it comes to issues community banks should address -- like money laundering -- we all have to do a better job. The government put parameters in place long ago. Those parameters have been expensive to implement, yet very ineffective. In fact, they simply haven't worked well. It's time to get serious and develop a new strategy.

In general, community bankers need to pay close attention to their customers. If they see something going on -- unusual transactions or requests that appear to be out of the ordinary -- they need to raise a flag and notify law enforcement officials. The fear, of course, is wrongfully targeting individuals or groups. It's important to treat everyone fairly. At the same time, they owe it to everyone around them to take the steps necessary to resolve a questionable situation, if one exists.

Answer: 

Answer by Mary Beth Guard:

The full extent of the impact on community banks will be more clear after the Treasury has put out regulations under Section 352 of the USA PATRIOT Act (page 52 of the PDF document) to help clarify the requirements of an anti-money laundering program. By April 24, 2002, the Secretary of the Treasury is required to prescribe regulations that consider the extent to which the requirementsimposed under anti-money laundering program section of the PATRIOT Act are commensurate with the size,location, and activities of the financial institutions to which suchregulations apply. We'll see then what, if any, special provisions or exceptions may apply to community banks.

First published on BankersOnline.com 4/01/02

First published on 04/01/2002

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