FinCEN Files: What Community Banks Should Know
James Stevens, a partner in Troutman Pepper’s Financial Services Practice Group, was quoted in an October 2, 2020 Bank Director article titled, “ FinCEN Files: What Community Banks Should Know.”
“That is probably the biggest go-forward lesson for banks: Make sure that your policies and procedures are such that — when someone is looking at this in hindsight and evaluating whether you should have done something more — you can demonstrate that you had the proper policies and procedures in place to identify when something more needed to be done,” says James Stevens, a partner at Troutman Pepper.
Although it may be obvious, Stevens says banks should be “vigilantly evaluating” transactions not just for whether they merit a SAR, but whether they should be completed at all.
Size Doesn’t Matter
When it comes to BSA/AML risk profiles and capabilities, Stevens says size doesn’t matter. Technology has leveled the playing field for many banks, allowing smaller banks to license and access the capabilities that were once
the domain of larger banks. It doesn’t make a difference in a bank’s risk profile; customers are its biggest determinant of a bank’s BSA/AML risk. Higher-risk customers, whether through business line or geography,
will pose more risk for a bank, no matter its size.
. . .
“Front Page of the Newspaper” Test
Reporting in recent years continues to cast a spotlight on BSA/AML laws. Before the FinCEN Files, there was the
2016 Panama Papers. Stevens says that while banks have assumed that SARs would remain confidential and posed only legal or compliance risk, they should still be sensitive to the potential reputational risks of doing business
with certain customers — even if the transactions they complete for them are technically compliant with existing law.
“Like everything else we do, you have to be prepared for it to be on the front page of the newspaper,” he says.