Seal of the Board of Governors of the Federal Reserve System
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.  20551
DIVISION OF BANKING
SUPERVISION AND REGULATION
SR 07-10
July 19, 2007

TO THE OFFICER IN CHARGE OF SUPERVISION AND APPROPRIATE SUPERVISORY AND EXAMINATION STAFF AT EACH FEDERAL RESERVE BANK AND EACH DOMESTIC AND FOREIGN BANKING ORGANIZATION SUPERVISED BY THE FEDERAL RESERVE
SUBJECT:  Interagency BSA/AML Enforcement Policy Statement

The Federal Reserve and the other federal financial regulatory agencies (agencies) have issued an interagency policy on the application of section 8(s) of the Federal Deposit Insurance Act. This provision generally requires each federal banking agency to issue an order to cease and desist when a supervised institution is in violation of the requirement to establish and maintain a Bank Secrecy Act/anti-money laundering (BSA/AML) compliance program. The policy statement is attached.

The policy has been issued to promote a consistent approach for agency enforcement of BSA/AML requirements and to make those standards more transparent to the industry. The policy does not require banks to take any steps and does not require examiners to follow different procedures from those currently set forth in the FFIEC BSA/AML Examination Manual. Rather, the policy sets forth the agencies’ legal interpretation of the statute, and describes circumstances under which they must take action under section 8(s).

While the Federal Reserve has not previously released enforcement guidelines under section 8(s), the new policy does not dictate any significant changes in the Federal Reserve’s current approach to enforcement for BSA/AML compliance violations. As under the current approach, the Federal Reserve will continue in each case to carefully consider the facts and circumstances to determine the appropriate supervisory and enforcement response.

The policy statement makes clear that, in addition to the circumstances where the agencies will issue a cease and desist order in compliance with section 8(s), they may take other actions as appropriate for other types of BSA/AML program concerns or for violations of other BSA requirements. The policy statement also does not address the independent authority of the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) to take enforcement action for violations of the BSA.

Reserve Banks are asked to distribute this SR letter to supervisory staff and to the supervised domestic and foreign banking organizations in their Districts. Questions may be addressed to Rich Ashton, Deputy General Counsel, (202) 452-3750 or Stephen H. Meyer, Assistant General Counsel, (202) 452-2522, Legal Division, or to Nina Nichols, Assistant Director, (202) 452-2961, or Gail K. Jensen, Special Counsel, (202) 452-3841, Division of Banking Supervision and Regulation.

Roger T. Cole
Director


Attachment:
Interagency Statement on Enforcement of Bank Secrecy Act/Anti-Money Laundering Requirements (411 KB PDF)


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Last update: July 19, 2007