The Clearing House, which advocates on regulatory, legislative and legal public policy issues on behalf of the largest US commercial banks, has called for a root and branch overhaul of how its members approach anti-money laundering and counter financing of terrorism (AML/CFT) requirements.

The banks argue that they should spend less time and money on submitting suspicious activity reports and instead focus on employing more innovative methods to thwart money laundering and terrorist financing.

Limited utility

The conclusion of a report published by the Clearing House says the vast majority of member banks felt that most of the resources devoted to AML/CFT by the financial sector have limited law enforcement or national security benefit.

In some cases the banks concluded that AML/CFT requirements cause collateral damage to other vital US interests – from US strategic influence in developing markets to financial inclusion.

The report suggests that a redeployment of resources has the potential to substantially increase US national security and the efficacy of its law enforcement and intelligence communities, and enhance the ability of the country to assist and influence developing nations.

FinCEN focus

The report, ‘A New Paradigm: Redesigning the US AML/CFT Framework to Protect National Security and Aid Law Enforcement’, argues for a much greater role for the US Treasury Financial Crimes Enforcement Network (FinCEN), which should become the sole supervisory authority for AML/CFT.

Conversely, the number of different agencies currently involved in combatting money laundering and terrorist financing should be reduced the report suggests.

Banks also want to see an overhaul of requirements to send FinCEN suspicious activity reports (SARs), which often require significant time and energy from bank staff, yet many are never read according to the report.

Bank FIUs

The FinCEN e-filing system also needs overhauling according to the Clearing House, which argues that this would free up bank resources that could be focused on their financial intelligence units (FIUs).

Banks’ FIUs are often staffed by ex-law enforcement officials and are being established by financial institutions to focus on AML/CFT operations.

The report, ‘A New Paradigm: Redesigning the US AML/CFT Framework to Protect National Security and Aid Law Enforcement’ can be found here.

Categories: Trade Based Financial crimes News