Comptroller Dugan Tells Bankers OCC Is Committed To Measured, Fair, and Effective BSA/AML Supervision

WASHINGTON—Comptroller of the Currency John C. Dugan said today that the OCC is committed to a process of Bank Secrecy Act and Anti-Money Laundering (BSA/AML) supervision and enforcement that is not only effective, but also measured and fair.

"The post–9/11 world is profoundly different in many ways from what it used to be, and that is certainly true in the BSA area," Comptroller Dugan said in a speech before a money laundering conference sponsored jointly by the American Bankers Association and the American Bar Association.

"Whether we like it or not, the traditional concerns of BSA, that, disrupting the money flow of the drug trade and other illicit activity, have been joined with concerns about combating the financing of terrorism," he said.

Mr. Dugan said that neither banks nor regulators could afford to adopt a casual approach to BSA compliance and offered a four-step approach for banks to meet their BSA/AML responsibilities:

• Establish a culture of compliance that begins at the very top and permeates all layers of the organization. It is absolutely necessary that a bank's commitment to BSA/AML compliance start at the board and senior management level, and run through all levels and departments of the institution.
• Know the institution's risks. While different approaches may be appropriate for different institutions, it should begin with a thorough and honest assessment of the bank's products, customers, and service area.
• Design and implement a BSA/AML compliance program that is commensurate with the bank's risks. This is the most critical element of an effective BSA/AML program and an area in which one size does not fit all.
• Pay attention to the examiners. Bankers should always feel free to ask questions, provide feedback, and even challenge an examiner's conclusion through appropriate channels. But when those avenues have been exhausted, and an examiner's criticisms have been reduced to some form of supervisory warning, failing to correct the problem will only result in stronger and more forceful supervisory action.

Mr. Dugan said that the OCC has embarked on a comprehensive review of its supervision to better understand where weaknesses existed, and how to improve them. Although the review is still underway, he described three initiatives that the OCC has already undertaken.

First, the OCC has developed methods for enhanced risk assessment of a bank's products, customers, and geographies. Second, the OCC is applying the new uniform examination procedures in all examinations.  Third, the OCC has adopted improved processes to identify and correct deficiencies and weaknesses and to initiate enforcement actions when appropriate.

Mr. Dugan said that the fight against money laundering and terrorist financing "is a marathon, not a sprint, and there is no finish line." Bankers and regulators share in a common goal of better BSA/AML supervision and compliance and both are committed to work together to achieve that goal, he added.

"There will be more challenges along the way, and the road may be rocky at times," Mr. Dugan concluded. "But I believe that, through our collective efforts, we will achieve and sustain a level of BSA/AML compliance and supervision that better ensures our nation's financial institutions are not used as vehicles for money laundering, terrorist financing, or other illicit activity. And I believe that the banking industry, and the nation, will be better for it."

Related Link

• Speech