March 07, 2013


WASHINGTON – U.S. Senator Mike Crapo (R-ID), Ranking Member of the Senate Banking, Housing and Urban Affairs Committee, today delivered the following remarks during a Banking Committee hearing assessing compliance and enforcement of the Bank Secrecy Act:
"Thank you, Mr. Chairman.
"Today, we will hear testimony from the Treasury Department, the Office of the Comptroller of the Currency (OCC) and the Federal Reserve about large bank compliance with the Bank Secrecy Act and economic sanctions laws.
"Financial institutions represent the front line in the global fight against money-laundering and international sanctions evaders.  However, the compliance weakness of even a single large financial institution can result in much harm.
"Last year alone, there were two cease and desist orders and three of the largest Bank Secrecy Act and sanctions monetary penalties in history.
"Going back a few more years, we see significant compliance failures among at least another half dozen large financial institutions.
"The failures and types of institutions involved highlight a number of issues concerning real and potential deficiencies in the enforcement regime which the Committee will explore today.
"The length of time financial institutions are given by their regulators to comply with the law before an agency acts to compel compliance with sufficient force continues to be a problem.
"None of the acts which led to any of the recent enforcement actions are novel or one-time outliers.  Yet they continue to happen, despite severe monetary penalties and a strict regulatory structure.
"We need to think about actions that would bring real change to an institution’s compliance structure and culture, particularly to capture the concerns an institution’s foreign branches and affiliates present.
"With the sheer number of enforcement agencies, supervisors and corporate talent monitoring for compliance issues, it’s difficult to imagine how such compliance failures continue to materialize.      
"More needs to be done regarding how to coordinate international enforcement activities, penalties and sharing of information across examinations and other ongoing investigations.
"The nature of bank examination and examiners is also a concern.  Examiners, even without investigative training, should be able to recognize suspicious activity by what they see—or don’t see—and make a referral.
"The Bank Secrecy Act structure has plenty of authority built into it by now.  The question is whether that authority is being properly executed, or whether the government’s rules need to be sharpened, made smarter or more targeted.  More regulation alone is not the answer.
"I would like to express my appreciation to those of you on the panel committed to ensuring the safety and the integrity of the financial sector and our nation’s security.
"It is terribly important work further complicated by today’s instantaneous, and oftentimes opaque, nature of global transactions.
"We look forward to all of your testimony, and thank you for coming."