2020 Journal of Community Bank Studies

THIRD PLACE: Mansfield University of Pennsylvania

law enforcement and financial institutions. In addition, C&N also wishes that it received more comprehensive feedback about the findings of criminal investigations that relate to banks. The relationship between financial institutions and law enforcement is extremely important. In the last five years, the Internal Revenue Service Criminal Investigation force used the BSA database 126,000 times, which helped to launch 25% of its investigations (“Promoting Corporate”). When banks know important information about a specific case, they will relay it all to law enforcement. However, the banks are rarely provided updates after the fact, despite volunteering key information. Another bill that would work to modernize the BSA is the Corporate Transparency Act. The U.S. House of Representatives passed the bill in October 2019, but it has yet to move to the Senate. One obstacle when attempting to deter financial crimes is that states do not require companies to disclose their beneficial owners (“Promoting Corporate”). This allows for various criminals to hide behind their companies and avoid proper punishment. This act would regulate anonymous shell companies by defining a “beneficial owner” as the person or persons who possess most of the company’s control or receive the most monetary benefits. From this information, the involved parties could create a database, which law enforcement could access when necessary (“Promoting Corporate”). This bill would improve the relationship between law enforcement and financial institutions, as well as create a better path to detecting financial crime.

The relationship between financial institutions and law enforcement is extremely important.

C&N also expressed concern regarding cryptocurrency and how the development of the digital currency will affect the relationship that law enforcement has with banking in the future. In May 2019, FinCEN issued a guidance document that addressed how convertible virtual currencies (CVCs) apply to BSA/AML compliances and how to effectively identify criminal activity with the unconventional medium of exchange. Although the document did not establish any new regulations, “it consolidates current FinCEN regulations, and related administrative rulings and guidance issued since 2011” (“Application”). There is still a gray area when it comes to CVCs, but FinCEN is working to provide solutions about how to adapt to the changing currency, and banks are learning to respond. Future of BSA Compliance Methods C&N is always looking for new and innovative ways to improve its BSA compliance methods since there is no such thing as too much security. Recently, the bank has also been looking into new software to invest in

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