I was prepared to answer the blog editor's call for an AML-focused report from ABA's recent Regulatory Compliance Conference--the 25th Anniversary, no less--and the continued commitment from the banking industry to stay focused on the many current and future compliance challenges facing these professionals. Suffice it to say that all CEOs and agency heads should have to simply read the agenda for this excellent event to gain some appreciation into the vast array of complicated issues addressed by today's compliance official.
 
Instead of staying on that topic, albeit an important one, I want to return to a theme I've touched on before that has the potential of doing great harm to a collaboration that is essential to battling a variety of criminal activities--regulatory examiners who do not see the forest for the trees.
 
In this case, they may be preventing banks from playing a more meaningful part in stemming a modern plague: human trafficking.
 
Working to stop a growing problem
ACAMS held a global webinar last week that provided several thousand participants with practical advice on reporting and preventing human trafficking.
 
As presenters reminded the audience, the federal regulators' BSA/AML manual states very clearly:
 
"Banks are required to report suspicious activity that may involve money laundering, BSA violations, terrorist financing, and certain other crimes above prescribed dollar thresholds. However, banks are not obligated to investigate or confirm the underlying crime (e.g., terrorist financing, money laundering, tax evasion, identity theft, and various types of fraud). Investigation is the responsibility of law enforcement. When evaluating suspicious activity and completing the SAR, banks should, to the best of their ability, identify the characteristics of the suspicious activity. "
 
What is happening now is that examiners are looking at human trafficking investigations and questioning bank's processes, monitoring, and in some cases the quality of the staff leading these efforts. In the words, of comedian Norm McDonald, the response to these actions would be, "Wait, What?"
 
Regulators have to stop the madness and allow financial institutions to seek additional methods to stop human trafficking without fear that agency officials will criticize their processes and second-guess their investigations.
 
(I know that regulators are dedicated public servants that toil to make sure banks are in compliance in the face of many pressures. But while I'm not in their shoes, I have to make this plea.)
 
You may recall that industry leaders, who are so committed to fighting this horrific crime, worried that this would happen. It is clear that banks are not required to discern human trafficking activities but are to report suspicious activity. But nothing will quickly stop the progress made by the excellent financial institution-law enforcement partnerships as formal (and informal) regulatory criticism on programs designed specifically to find and report creative financial crimes.
 
If this continues, banks will not seek staff that can develop new approaches to these activities but will bring on personnel who are there only to handle mundane recordkeeping and reporting responsibilities. Bank officials will not attempt to address complicated crimes because when they do, they are punished.
 
The Who certainly weren't referring to AML officials but their warning that they "Won't Get Fooled Again" applies here nonetheless.
 
I have been around long enough to know that some in the regulatory community will say that these criticisms are unfounded, that such behavior isn't going on. But others know better.
 
It is also not relevant to say that some programs need improvement, because that is not the point here, either.
 
And for our colleagues in law enforcement, it is up to you to speak to your regulatory counterparts and prevent a wholesale rejection of proactive activity by the banks who want to do the right thing.
 
Folks, let's get this right--the global community demands no less.
 
The lighter side: How did you celebrate "Global Smurfs Day"?
It is not common for AML officials to note a day celebrating a cartoon but last Saturday was indeed, "Global Smurfs Day" and there were attempts to set a new Guinness World Record for the most participants to show up in 12 cities around the world dressed as one of the little blue men.
 
The winners were in Mexico City (4,600, I believe).
 
The only question for the AML community is: "Did they all have less that $10, 000 US on them in cash?"
 

• About John Byrne, CAMS 
• Byrne is Executive Vice-President of the Association of Certified Anti-Money Laundering Specialists (ACAMS). He has written extensively on AML issues for 25 years and has appeared on television and testified before many congressional committees on AML-related policy issues. Prior to joining ACAMS, John was the Global Regulatory Relations Executive at Bank of America. Previous to that, he worked for the American Bankers Association for 22 years and was responsible for ABA's lobbying, regulatory, and educational efforts on money laundering, and other compliance issues. He received the ABA's Distinguished Services Award and was also the first private sector recipient of the “Director's Medal for Exceptional Service” from the Treasury Department's Financial Crimes Enforcement Network (FinCEN). Byrne can be e-mailed at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .

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