This article was republished with permission from Michael Volkov’s Corruption, Crime & Compliance.
I always say that the government does not enforce the laws in secret – they tell businesses what they plan to do and then they carry it out. The announcement of an enforcement initiative is always followed by a series of press conferences announcing prosecutions under the initiative. The examples of this include FCPA, health care fraud, export violations, gun violence and on and on throughout the history of the Justice Department.
Last week, the Justice Department warned banks that it plans to initiate aggressive enforcement actions to improve compliance with anti-money laundering and terrorist financing prohibitions. In the government’s view, banks have not done enough to stem the flow of illicit funds into the U.S. banking system.
Recently, the Justice Department and banking regulators have not really shied away from enforcement actions against banks for money laundering, Bank Secrecy Act and terrorist financing violations. The banking industry would be wise to take the Justice Department’s words seriously and renew their compliance efforts.
Mythili Raman, the acting Assistant Attorney General who heads the Justice Department’s Criminal Division, stated, “It’s not as if [the DOJ’s] enforcement actions are over. There’s more to come, and that suggests to me that there are still banks that haven’t gotten the message.”
In the last few years, HSBC, Standard Chartered, Citigroup, JPMorgan and M&T Bank Corporation have been the focus of significant DOJ and regulatory enforcement actions.
Prosecutors are bringing enforcement actions using the Bank Secrecy Act, which requires banks to implement controls to make sure that monies are not the proceeds of illegal activity.
AML enforcement involves close coordination between the DOJ and bank regulatory agencies. Criminal investigations usually start after regulators detect problems with a bank’s compliance controls. Regulators provide the DOJ with an important source of information. They identify banks with weak AML compliance programs, detect issues of compliance with the Bank Secrecy Act and refer matters to the DOJ for criminal prosecution.
Banks have a lot on their plates these days. Financial institutions have a number of risks beyond significant financial risks – the DOJ and the SEC are scrutinizing their interactions with sovereign wealth funds, and global operations face unique risk in compliance with economic sanctions.
Add to the mix the growing legalization of marijuana sales and online poker in the United States, and compliance departments are being pushed to screen and investigate a larger number of customers and financial activity.
Banks have to make sure they do not let a “systemic” problem fall between the cracks. If any area begins to breakdown, banks will be on the hook for a criminal investigation.
For CCOs, the message is clear – they need to review and improve existing programs. While the government has acknowledged that banks already have improved their compliance programs, it is a little disheartening when the government pushes yet again for even greater compliance efforts.
Michael Volkov is the CEO of The Volkov Law Group LLC, where he provides compliance, internal investigation and white collar defense services. He can be reached at 
