Regulatory Bulletin: May 2017


In This Issue:

  • What Do You Need to Know About Fair Lending Focus in 2017?
  • Do AML Compliance Officers Need to be Worried About Personal Liability?
  • What Types of Training Can Reduce BSA/AML Risk?
  • Reminder – How is Your Beneficial Ownership Rule Planning Going?
  • Contact Our President or Marketing Director for More Information
 What Do You Need to Know About Fair Lending Focus in 2017?

The answer is plenty!  The Consumer Financial Protection Bureau (CFPB) issued is Fair Lending Report in April.  It can be found at:

In the report, the CFPB identities its 2017 priorities for increasing focus in three major areas as follows:

1. Redlining – Evaluate whether lenders have intentionally discouraged prospective applicants in minority neighborhoods.

2. Mortgage and Student Loan Servicing – Evaluate whether some borrowers who are behind on their mortgage or student loan payments may have more difficulty working out a new solution with the servicer because of race, ethnicity, sex or age.

3. Small Business Lending – Take actions to address concerns by Congress that women-owned and minority owned businesses may experience discrimination when they apply for credit.  Small business lending supervisory activity will also help expand and enhance the CFPB’s knowledge in this area, including the creit process; existing data collection process; and the nature, extent and management of fair lending risk.

FRC has extensive expertise in all aspects of Fair Lending.  If you need any assistance please contact us.


Do AML Compliance Officers Need to be Worried About Personal Liability?

If the recent experience of MoneyGram’s ex-Chief Compliance Officer, Mr. Thomas Haider, is any indication, the answer is a resounding YES.  On May 3rd, he settled alleged anti-money laundering (AML) compliance violations with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network for $250,000, according to announcements by FinCEN and U.S. Attorney’s Office for the Southern District of New York.  This shows that FinCEN has now expanded its efforts to seek penalties against an individual for mismanagement of an AML compliance program.

It was alleged that Mr. Haider willfully failed to ensure that MoneyGram implemented an effective AML program and willfully failed to make certain that MoneyGram filed SARs on reports of fraud or money laundering through these agents as required by the BSA and AML laws.  The settlement amount of $250,000 appears to be the largest paid by an individual to date for this type of issue.  One of the issues cited was that Mr.Haider succumbed to pressure from the sales department to not discipline or terminate agents and failed to ensure appropriate SARs were filed.

From a financial management perspective, the Haider/MoneyGram matter makes it clear that BSA/AML officers must be free from an atmosphere where sales staff or others discourage appropriate actions.  The settlement also makes it clear that potentially the BSA/AML officers could be liable personally for not taking appropriate actions.

It should also be noted that some states, such as New York, have also adopted regulations which may require certifications that the financial institution’s AML program meet certain requirements.


What Types of Training Can Reduce BSA/AML Risk?

Senior management and staff training may reduce BSA/AML risks and the types of inappropriate judgement/actions noted in the above MoneyGram/Haider matter.  FRC provides BSA/AML training to the Board of Directors and also prepares customized training programs for management and specific functional areas of banks.  These programs supplement the standard computerized BSA/AML classes typically provided to staff.  Training may also be focused on special needs, such as SAR processing and how to ensure the appropriate compliance culture permeates the organization.

Recently, FRC’s President and CEO, Mr. Kevin Kane, made a presentation to regional banks in the Maryland with the latest issues relating to BSA.  The Five Pillars of BSA and the role of the Board of Directors were discussed relating to:

A. Internal Policies, Procedures and Controls
B. Experienced and well trained BSA Officer
C. Adequate Independent Test
D. Training
E. Beneficial Ownership Rule (2018)

Subtopics such as Customer Identification Program (CIP) were discussed, including Customer Due Diligence (CDD), Customer Risk Assessment, Enhanced Due Diligence (EDD), Monitoring and Suspicious Activity Reporting.  Of particular interest is the new Beneficial Owner Rule.  If you are interested in any level of enhanced BSA/AML training, please contact us.


Reminder – How is Your Beneficial Ownership Rule Planning Going?

Regulators are starting to gear up for examination of the Beneficial Ownership Rule.  They will expect to see evidence of Board and Senior Management oversight in planning for and implementing the new rule.

Below is recap of the background and some detailed suggestions.  For further information or assistance please contact FRC.

On May 11, 2016 FinCEN issued a new customer due diligence rule requiring that covered financial institutions collect and verify information on beneficial owners of accounts opened in the name of a legal entity (CD Rule).  Financial institutions have until May 18, 2018 to implement the rule and ensure compliance.

Covered financial institutions will be required to identify and verify the identity of the beneficial owners of all legal entity customers at account opening. Thus, if a new account is opened in the name of a corporation, LLC, general partnership, etc., the covered financial institution must identify any beneficial owner who directly owns 25 percent or more the equity interests of the entity or is a single individual who exercises control.

1. Establish Written Procedures designed to identify and verify beneficial owners of each customer at the time of opening the account.  These written procedures will be based on existing CIP, CDD, and EDD processes.

2. Implement Risk Based Procedures to Conduct on-going Monitoring.
The new risk-based procedures should cover at a minimum the following:
• Monitoring, testing, audit functions and reporting of beneficial ownership information
• Identification of person responsible for day-today compliance with CDD rule
• Implementation of training where necessary on identifying beneficial ownership information
• Establish appropriate managerial  and Board oversight
• Utilizes of available resources to manage the process

3. Collect and Maintain Information About Beneficial Ownership.  Institutions must develop mechanism to collect, maintain, update information on beneficial ownership


Contact Our President or Marketing Director for More Information

• Mr. Kevin Kane, President, CEO and Founder of FRC, who has substantial legal, compliance and regulatory experience – (212) 849-6828
• Ms. Shelly Berman, Marketing Director, who has substantial experience in assisting financial institutions obtain the products and services they need to meet their goals – (301) 262-6987

For more information visit


This entry was posted on Thursday, May 18th, 2017 at 7:56 pm and is filed under Regulatory Bulletins, Regulatory Insights. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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