Lessons Learned From Recent AML Enforcement Actions


Bryan Chapman

Publish Date



  • AML and Financial Crime
  • ComplianceAlpha
  • RegTech

In the ever-evolving landscape of financial transactions and global commerce, combatting money laundering and terrorist financing remains a paramount concern. Regulatory bodies consistently bring enforcement actions against entities failing to meet Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) obligations to maintain the integrity of the financial system.

By analyzing recent cases, institutions can identify regulatory trends and enhance their compliance framework to mitigate potential risks. Reviewing AML and CTF enforcement actions brought by U.S. regulators over the past year can provide a number of benefits, including:

  • Lessons from recent cases: Regularly reviewing recent enforcement actions enables financial institutions to learn from the mistakes of others. Analyzing case studies sheds light on specific vulnerabilities and pitfalls to avoid.
  • Regulatory compliance: Regulators worldwide increasingly expect financial institutions to stay up-to-date with industry trends and regulatory changes. A proactive approach to incorporating lessons from enforcement actions helps institutions align with evolving compliance standards.
  • Risk mitigation: By studying enforcement actions related to sanction screening, know your customer (KYC), and training, institutions can proactively identify potential weaknesses in their systems and processes. This preemptive approach enhances risk mitigation strategies.
  • Reputation management: Public trust is paramount in the financial sector. Regularly reviewing and adapting practices based on enforcement actions demonstrates an institution's commitment to combatting financial crime and safeguarding its reputation.

Below are examples of some of the lessons that can be learned from enforcement actions.

Sanction Screening

Recent AML enforcement actions underscore the critical nature of efficient and accurate sanction screening processes. Financial institutions must ensure their systems promptly identify and flag individuals, entities, and countries subject to economic sanctions. The incident involving an Office of Foreign Assets Control (OFAC) settlement with a cryptocurrency exchange serves as a stark reminder of the repercussions faced by entities neglecting to screen sanctions properly. Such cases highlight the need for robust systems that continuously update and cross-reference sanctions lists against customer databases, enabling timely alerts and appropriate actions to prevent illicit transactions.

Policies and Procedures

Policies and procedures are the backbone of an effective AML program. Recent enforcement actions cases, such as the Federal Deposit Insurance Corporation (FDIC) consent order against a state bank or the New York State Department of Financial Services (NYDFS) case against a cryptocurrency and bitcoin exchange, portrays the consequences of inadequate or outdated AML polices. Policies and procedures should not be static documents and should continuously be evaluated and updated to reflect the evolving threat landscape.

Know Your Customer (KYC)

KYC procedures are the first line of defense against money laundering and illicit financial activities. Lapses in KYC processes can result in severe penalties. For instance, the case of the Office of the Comptroller of the Currency (OCC) against a regional bank exposed how inadequate customer due diligence can allow criminals to exploit financial systems. By regularly reviewing enforcement actions, financial institutions can enhance their KYC protocols, ensuring accurate customer information, beneficial ownership transparency, and risk-based assessments. By incorporating cutting-edge technologies, like biometric authentication and advanced identity verification, institutions can stay ahead in the fight against financial crime.

Independent Testing

Independent Testing, also known as AML audits and reviews, plays a pivotal role in ensuring the effectiveness of an AML program. The OFAC action against a construction supply company highlighted the critical role of independent testing to identify weaknesses and deficiencies in an institution’s AML framework. Regular, unbiased assessments by external experts provide an objective view of an institution compliance efforts, and this is not just a “tick the box” exercise.

Continuous Training

The continuous AML compliance training is only as effective as the personnel responsible for its implementation. The OCC case against a regional bank emphasized the pivotal role of continuous training to keep staff vigilant and well-informed about emerging risks and regulatory updates. Regular training sessions empower employees to promptly recognize suspicious activities and report them effectively.

In an era of heightened regulatory scrutiny, staying abreast of recent AML enforcement actions is indispensable for financial institutions and other firms. By scrutinizing the lessons learned from cases involving sanction screening, KYC, and training, organizations can fortify their compliance strategies, enhance risk mitigation efforts, and safeguard their reputation. This is further supported by the U.S. Securities and Exchange Commission (SEC) Risk Alert regarding observations from AML examinations of broker-dealers. As AML landscapes continue to evolve, the wisdom gleaned from recent actions will serve as a compass for institutions navigating the complexities of financial compliance.

How we help

Firms globally are striving to mitigate their regulatory risks, keep pace with industry best practices, and satisfy inquiries from prospective investors. With regulatory scrutiny on the rise, it’s crucial to get the right support to evolve and maintain AML programs. ACA can help you implement an effect AML program. 

  • AML Due Diligence Support – KYC/CIP Onboarding and AML Screening: Our AML due diligence managed services offerings are designed to assist your firm with implementing effective AML practices that meet industry best practices and comply with applicable local laws and regulations. Our AML team has extensive experience with a variety of firm profiles and strategies. We provide strategic support for key layers of your AML onboarding or deal-related reviews and screening, and comprehensive support for firms who want us to take on the entire process.
  • Regulatory Technology: Optimal efficiency and best practices are achieved when pairing our managed services with our AML Screening module in ComplianceAlpha®. The AML Screening module conducts sanctions screening and provides timely, automated, ongoing monitoring of 1,500 critical lists. This is a full-service, single vendor offering that is provided and supported by our team of compliance professionals, which includes Certified Anti-Money Laundering Specialists (CAMS), and other industry leading financial crimes certificates. Watch how it works here.

Reach out to your consultant, or contact us here to learn how we can help you meet your regulatory AML requirements.

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