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During hearings conducted in 2012 by the U.S. Senate’s Permanent Subcommittee on Investigations, Sen. Tom Coburn (R-Wyo.) commented that in its approach to anti-money laundering compliance lapses by the bank under investigation, the Office of the Comptroller of the Currency had resembled “a lapdog” rather than the “watchdog that we sorely need.” The remark resonated. Part of the political fallout from the financial crisis that began in 2008 was a sense that the federal government had not been nearly vigilant enough in its oversight of financial institutions with respect to AML. Regulators and prosecutors have responded to Congress’ rebuke, ramping up their focus on AML through more public and more punitive enforcement.

Federal regulators have long agreed on the elements of a satisfactory compliance program for Bank Secrecy Act/anti-money laundering purposes. So what has changed since the financial crisis? Prior to 2012, findings of deficiencies or weaknesses in a BSA/AML compliance program were most often imparted in a formal but nonpublic communication from a regulatory agency to an institution’s board of directors. Many enforcement actions did not include monetary penalties. But around 2012, at the urging of Congress and others, regulators began issuing large numbers of public enforcement actions that included significant, record-breaking fines.

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