Should CEO’s personally vouch for their BSA programs?

February 26, 2015 at 8:51 am Leave a comment

Should CEO’s have to personally attest to  the  adequacy of their Anti Money Laundering programs the same  way top executives have to vouch for the accuracy of their financial reports under Sarbanes-Oxley? That is an idea being considered by  Benjamin M. Lawsky, NY’s Superintendent of Financial Services for the State of New York’who outlined his proposal   in a speech on “Financial Federalism” at Columbia law school yesterday.

A recurring theme of Lawsky’s   public comments of  late has been his frustration with the unwillingness of major financial firms to change their practices even after they have been subjected to huge fines.  The former federal prosecutor argues that more has to be done to hold specific individuals and not just the corporations they run responsible for malfeasance that takes place on their watch.

For my money nowhere is this truer  than in the area of BSA and AML enforcement.  Just this morning BankingLaw360 reports that   Citigroup Inc. and its Banamex USA unit are under investigation by the Treasury and  California regulators  over their compliance with anti-money laundering requirements and the Bank Secrecy Act.

The truth is that even as the smallest of credit unions have made attempts to comply with BSA requirements some of the most  legally savvy, technologically advanced corporations  in the world have chosen to  ignore some of the most basic AML\BSA requirements.  It’s a national scandal that has gotten nowhere near the attention it deserves.  They write a big check when they get caught and then go about their business as if nothing ever happened.  Fines alone aren’t working.

Lawsky’s solution is to bring about more personal accountability:

“First, we are considering random audits of our regulated firms’ transaction monitoring and filtering systems, employing the same methodology our independent monitor used to spot deficiencies.

Second, since we cannot simultaneously audit every institution, we are also considering making senior executives personally attest to the adequacy and robustness of those systems.

This idea is modeled on the Sarbanes-Oxley approach to accounting fraud.”

In theory I love the idea,   Our nation’s BSA framework is only as effective as our largest banks are willing to make it.  Executives should generally  understand what transactions are being red flagged and why.

But  if this proposal gets  implemented I don’t want to see smaller institutions get sucked into the vortex.  Just as Sarbanes Oxley’s personal attestation provisions only applies to larger corporations a BSA attestation mandate should only apply to the largest banks.  The evidence shows that the vast majority  of credit unions and smaller banks  have committed resources to complying with federal anti- money laundering laws.  It’s the big guys who need to be reminded that violating the law isn’t in their personal or corporate best interest.

The entire speech is worth a read.  Here is a link.

Is another minimum wage hike on the way?

Governor Cuomo is pushing hard for legislation that would increase the State’s minimum wage to  $11.50 in New York City and $10.50 elsewhere.  Even if this wouldn’t directly impact your credit union’s  pay scale remember that NY law generally shields the higher of 240 times the state’s minimum wage or the federal minimum wage  from levy and restraint by private sector creditors  even for those members who  don’t have  government funds directly deposited into their accounts.   (N.Y. C.P.L.R. 5222). So as the minimum wage goes up so too does the amount of money in a member’s account shielded from creditors.    That’s right: The more money Government mandates people get paid the more money people get to  shield from their creditors.   Here is an article on the Gov’s minimum wage push.



Entry filed under: Compliance, New York State. Tags: , , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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