Pub. 4 2014-2015 Issue 1

12 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S FEATURE ARTICLE DAN HUSTON PARTNER MOSS ADAMS LLP “The purpose of the risk assessment is to help you assign the right resources to mitigate unacceptable levels of risk. An effective AML risk assessment should consider activities performed by the TPSP.” I t seems as though we see the head- lines daily: Another financial institution cited by banking regulators for inad- equate anti–money laundering (AML) program controls. Here are two examples of enforcement actions in the past 12 months that have resulted in large monetary fines: • In September 2013, a New Jersey– based bank with assets of $118 million was assessed a total of $4.1 million in civil monetary penalties for processing approximately $1.5 billion in transactions from Mexican and Dominican casas de cambios without proper monitoring and reporting of suspicious activity. • In November 2012, a Delaware bank was assessed a total of $15 million in civil monetary penalties for processing almost $22 million in transactions for a foreign money service business without proper controls to monitor for suspicious activity. Third-party service provider relation- ships play a major role in the types of vio- lations cited in recent enforcement actions involving failure of AML controls. Often third-party service providers (TPSPs) are also customers of the criticized financial institution, most commonly maintaining a depository relationship but also one that includes loans, ACH and wire transfer ser- vices, custodial services, and more. In both of the above enforcement ac- tions, the institution failed to recognize the risk associated with thousands of transac- Third-Party AML Programs: Practical Risk Management Strategies  Thrid-Party  continued on page 14