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AML Verification in USA – Changing the Landscape of Institutions 

By | February 11, 2024

United States (US) is seen fighting money laundering, terrorist funding, and other crimes for decades. Being a member of the global regulatory authority Financial Action Task Force (FATF), it has established a robust AML/CFT framework for industries. Furthermore, the country’s regulatory bodies have outlined strict penalties for businesses not adhering to AML compliance in the United States

In order to stay put with the regulations, institutions require efficient mechanisms. However, before incorporating any strategies, industries need to ensure that they understand the requirements enforced by the regulators. Later they should build efficient systems while aligning them to the regulations. The blog outlines guidelines by regulators and how institutions can stay compliant with AML verification in the United States. 

AML Security in the USA – Guidelines by Authorities 

The United States falls among one of the first countries to initiate a fight against financial crimes and combat them. Money laundering has been a legal offense in the US since 1986. However, despite the presence of efficient measures for anti money laundering in USA, criminals somehow find ways to exploit financial systems. Where the regulatory bodies imprisoned 91.1% of offenders, 90% of the crimes still were undetected. 

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Money laundering causes abruptions for not only the targeted country but the whole of the world’s economy. Therefore, regulatory bodies like the Financial Crimes Enforcement Network (FinCEN) are critically supervising institutions. They do so to ensure the industries stay put with AML compliance in the United States. 

If in any case businesses are alleged to have weak AML control systems or are facilitating money launderers, regulatory authorities can impose a set of sanctions or hefty fines. The following authorities are responsible for monitoring industries and ensuring they build efficient AML systems in the USA. 

The Financial Crimes Enforcement Network (FinCEN)

USA’s primary regulator – FinCEN, functions under the direct supervision of the United States Treasury Department. This authority is responsible for fighting terrorist funding, money laundering, and various other types of criminal activities. For this, FinCEN monitors financial institutions such as banks, insurance firms, and businesses involving the flow of money. 

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Building an efficient AML program in United States involves tracking transactions, detecting suspiciousness, and identifying customers. To fight criminals and assure a safe environment for customers, FinCEN collaborates with the regional government and federal regulatory agencies. 

Office of Foreign Assets Control (OFAC)

Similar to FinCEN, OFAC is also responsible to enforce AML compliance in United StatesStates. Moreover, this regulatory authority works under the jurisdiction of the US Treasury Department. The Office of Foreign Assets Control (OFAC) enforces sanctions regarding trade and other economic affairs. 

OFAC works to prevent risk-possessed entities from committing money laundering, organized crimes, terrorism funding, weapons proliferation, and other peripheral felonies. It issues guidelines and imposes penalties in accordance with AML compliance in United States. 

AML Program in United States – a Brief Guide to AML/CFT Regulations

In order to combat money laundering activities within the country, regulatory bodies in the USA have been enforcing strict AML/CFT rules. The major regulations include.  

The Bank Secrecy Act

The Bank Secrecy Act (BSA) was put forth in 1970 and is currently the most important part of AML compliance in United States. Banks, businesses, and other financial institutions align their operations with this rule to combat money laundering and ensure they don’t facilitate or become complicit in it. 

The BSA is responsible for obliging firms to build efficient AML systems in USA while staying in line with the compliance requirements. It further mandates institutions to perform Customer Due Diligence (CDD) while keeping records of customers. 

USA Patriot Act

The USA Patriot Act came into force in 2001 after the 9/11 terror attack. It is now an integral part of AML programs in United State. This particular reguatlions targets financial criminal activities associated with terrorism. It further strengthens the scope of BSA while providing law enforcement agencies with the liberty and additional investigatory powers. 

The USA Patriot Act is further introducing new screening and customer due diligence measures while imposing fines on people or firms so far seen involved in financial crimes. Furthermore, also provides requirements regarding cross-border transactions to fight international money laundering and terrorism.

Concluding Remarks

BSA and USA Patriot Act provide guidelines regarding AML security in USA. However, performing manual CDD and screening checks take long spans of time as well as additional resources. In order to ensure AML compliance in United States, institutions need to build efficient mechanisms. Furthermore, the regulatory bodies strictly supervise the firms in order to ensure their operations are in line with the standards. Hence, institutions require digital AML solutions in USA to outperform money launderers. 

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