While many of us will be making personal resolutions for the New Year for personal self-improvement goals, AML/CFT Officers should consider a few resolutions that are geared towards their AML/CFT Programs.
Policy and Procedure updates
The Board of Directors annual approvals of policies are an important governance process. But when was the last time a deep dive was taken into the AML/CFT Policy and supporting procedures to make sure that the statements within still align with practice? TCA often identifies misalignment of policy statements and operations. For example:
- The AML/CFT Policy may state that the institution does not offer services to independent ATM owners and operators (IOATM), but in the years since the initial Policy was drafted and approved, the institution has allowed IOATMs to open accounts or discovered that a legacy customer has an IOATM that was not originally known to be in operation.
- The institution used to perform BizChex screening on all commercial retail customers opening new accounts and indicated as such in the CIP, but now BizChex is no longer used, and the CIP was not updated to reflect that change.
- The AML/CFT Policy states the institution performs automated screening of the existing customer base weekly or whenever the list is updated by OFAC, but the OFAC Policy states that screening is performed manually once a month.
The New Year is a good time to set up a schedule to conduct a deep dive into key Program documents to make sure they are accurate and not in conflict with each other. It is also a good time to look at processes and evaluate opportunities for compliant efficiencies. If there is an updated process from the past year, make sure it is appropriately documented to ensure you are creating that system of internal controls (AML Pillar).
FinCEN/OFAC Contact Changes
If the AML/CFT Policy or OFAC Policy or supporting procedures specifically reference the hotline phone numbers for FinCEN or OFAC, then these policies should be updated to reflect changes that FinCEN and OFAC have made about how to contact them. If not specific policy or procedure references, AML/CFT Officers should update any internal contact notes to reflect these changes.
FinCEN is directing all inquiries to its web-based contact form. [1] They have disabled their phone numbers:(800) 949-2732 and (800) 767-2825.
OFAC has made similar changes to a solely web-based inquiry process. TCA published an article outlining the changes OFAC has made to its contact information in October 2024.[2]
OFAC Statute of Limitations Updates
In July 2024, OFAC published an Enforcement Release[3] outlining changes to the statute of limitations on civil and criminal violations of the International Emergency Economic Powers Act, 50 U.S.C. 1701 et seq. (IEEPA), and the Trading with the Enemy Act, 50 U.S.C. 4301 et seq. (TWEA). This update impacts record retention requirements related to OFAC. An interim final rule was published September 13, 2024 to the Federal Register.[4] The Effective date of the interim final rule is March 12, 2025. Per the interim final rule, “OFAC may now commence an enforcement action for civil violations of IEEPA- or TWEA-based sanctions prohibitions within 10 years of the latest date of the violation if such date was after April 24, 2019.”
This change in the statute of limitations impacts the amount of time records directly related to transactions that are subject to blocking or rejecting and subsequent reporting must be maintained. These records must now be retained for 10 years instead of 5 years.
No changes were made to record retention to evidence screening practices that do not result in an exact, reportable match; this remains a 5-year retention.
Institutions should update OFAC Policies to reflect the two different retention structures and procedures updated to allow for compliant retention of any affected transactions. Any automated records or systems that are used for OFAC compliance should be reviewed to see if any updates are needed to them to allow institutions to remain compliant.
Start the New Year off right with TCA. TCA is A Better Way to stay up to date with compliance, AML/CFT, CRA, and Fair Lending requirements. Contact us at (800) 934-7347 or by email at [email protected].
[1] FRC Contact Us | FinCEN.gov
[2] Updates to OFAC’s Compliance Hotline Impact to Financial Institution’s Policies and Procedures – TCA
[3] OFAC Retention Update: Enforcement Release: July 22, 2024
[4] Federal Register :: Reporting, Procedures and Penalties – OFAC Interim Rule
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