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There were two major regulatory amendments after March, 1985. First, the final regulations which included casinos in the definition of "financial institutions and required them to file currency transaction reports became effective on May 7, 1985. Then, on August 7, 1985, the amendment governing the selective reporting of international transactions became effective.
During a recent meeting with Subcommittee staff members, our representatives agreed to provide information concerning current statutory authority for administrative subpoenas and summons issued by various Federal offices. A list of those offices and their statutory authority is enclosed. The Treasury Department believes that similar authority is necessary for the most effective enforcement of the Act.
I hope that this letter is responsive to your request. If you would like additional information, please let me know.
& Urban Affairs
Comptroller of the Currency
Washington, D.C. 20219
April 14, 1986
The Honorable Fernand J. St Germain
Supervision, Regulation and Insurance
Dear Mr. Chairman:
In response to your letter of March 27, 1986, we are pleased to provide a report updating the Subcommittee on our efforts to improve enforcement of the Bank Secrecy Act (BSA). The report includes detailed responses to the eight points mentioned in the letter. Together with the responses to the questions raised on the Financial Institutions Regulatory and Interest Rate Control Act of 1978 and the requested analysis of various bills dealing with money laundering appended to our testimony, it offers a comprehensive overview of what we have accomplished in the BSA area and progress we hope to see made in the future. Since this Office testified before the Subcommittee last April on the BSA, we have taken strides to improve BSA compliance. We have focused management control over our BSA program, establishing a central clearinghouse for BSA operations and responsibilities in the Chief National Bank Examiner's office and designating focal points for BSA activities in the districts. We have intensified BSA training of examiners such that over half of our examiners received some BSA training last year. We have made a concerted effort to increase industry awareness of the BSA by participating in meetings to discuss the Act and by helping to develop a training segment for an American Bankers Association teleconference on the subject. And, we have taken an active role in establishing and facilitating interagency task groups on bank-related crime in general and BSA enforcement in particular.
In order to build on the progress that we have made in the BSA area over the past year, we will continue on-going training and efforts to heighten industry awareness. In addition, we will work toward increased interagency coordination and improved utilization of information to target BSA enforcement efforts. While much has been accomplished since January 1985, more needs to be done. This Office is committed to its role in ensuring BSA compliance. But, law enforcement agencies and bank supervisors alone can provide only part of the answer. The industry's own commitment and efforts at self-policing are essential because banks' internal controls are the most effective mechanisms for promoting BSA compliance. With the legislative changes we urge in our testimony and active interagency cooperation and a committed industry, we are confident that substantial additional progress can be made in preventing the nation's financial institutions from being used, wittingly or unwittingly, to further criminal activity.
I look forward to working with the Subcommittee in the important task of improving BSA compliance.
ne Robert L. Clarke Comptroller of the currency
EMBARGOED UNITL DELIVERY
Report to the
Subcommittee on Financial Institutions
Supervision, Regulation, and Insurance
United States House of Representatives
Bank Secrecy Act Enforcement Since January 1, 1985
Office of the Comptroller of the Currency
April 14, 1986
The Office of the Comptroller of the Currency (OCC) has accomp 11 shed a great deal since January 1, 1985, in its efforts to improve national banks' compliance with the Bank Secrecy Act (BSA). Our efforts have proceeded along the lines set forth in our testimony before this Subcommittee on April 3, 1985. Specifically, as reported in our October 1985 six-nonth progress report and again in briefings for your staff in February of this year, we have improved training of our examiners, increased awareness and understanding of the Act's provisions in the national banking community, improved management control over our examination efforts, and worked to further effective enforcement by increasing coordination with Treasury, the other federal banking agencies, and the law enforcement community. The following progress report responds to specific questions posed in your March 27, 1986, letter of invitation.
The number of institutions examined by your agency since January 1. 1985. and the number and type of violations of the BSA found at these
institutions, and actions taken by your agency on these violations. During the period January 1, 1985, through December 31, 1985, OCC conducted approximately 4.150 examinations. These examinations varied in duration as well as scope. An examination may be conducted by one examiner for as little as a day or many examiners for several weeks. The scope of an examination may involve an analysis of a specific area of a bank's operation or a comprehensive analysis of the entire institution. of the 4,150 examinations, 1.084 identified violations of the BSA. The most frequently cited violation relates to improper completion of Form 4789, Currency Transaction Report (CTR). Common errors include incomplete addresses, improper identity verification, incompletelincorrect name and address of reporting financial institution, incorrect identification number of financial institution, and failure to sign the CTR. Late filing of CTRS is also a problem, though to a lesser degree. Another problem noted was the failure to file CTRs. A major problem involved the non-filing of CTRS on transactions with foreign banks. This problem relates to a 1980 change in the regulation which eliminated the exemption for transactions with foreign banks. Although we forwarded copies of the changed regulation to the national banks, it is apparent that many missed the change. Since early 1985, the banking community has become much more aware of this requirement, and we are now seeing fewer of these violations. Some problems in complying with the exemption list requirement in the regulation have also been noted. Examiners have found instances where ineligible customers are included on exemption lists, exemption lists fail to include the required information, or the dollar amount of the exemption is suspect.