Florida Banker: BSA/AML Rules Must Change with the Times

The regulatory framework put in place to prevent money laundering and stop the financing of terrorist activity should be updated to reflect the changes that have taken place over the past several decades, banker Lloyd DeVaux, president and CEO of Sunstate Bank in Miami, Fla., said today in a hearing before the House Financial Services Committee.

“BSA compliance is an important building block for our national security, but it is founded on principles that were developed nearly 50 years ago,” DeVaux said, in testimony on behalf of the Florida Bankers Association. “The world has drastically changed since the BSA was adopted in 1970… As the United States takes steps to combat terrorism and financial crime, now would be a good time to update the compliance requirements to develop a system suited to the twenty-first century.”

DeVaux noted that BSA/AML compliance requirements and costs have become increasingly onerous in recent years, particularly for community banks like Sunstate, a $200 million institution with three locations in Miami-Dade County. BSA/AML expenses accounted for more than 10 percent of Sunstate’s expenses in 2016, and of the bank’s staff of 45, seven of those employees — 15.5 percent of the bank’s total staff — are now devoted to compliance functions. “We have fewer staff devoted to serving customers and making loans that benefit the community than we have devoted to compliance,” DeVaux said. “That is not a recipe for success.”

DeVaux encouraged lawmakers and regulators to consider making changes to current filing requirements for Currency Transaction Reports and Suspicious Activity Reports, noting that bank compliance officers are currently required to conduct detailed investigations that law enforcement may be better equipped to handle. He also called for improvements to the information sharing processes between banks, regulators and law enforcement.

Finally, DeVaux expressed concern that increased compliance requirements around foreign correspondent relationships have caused many banks to “de-risk” and end those relationships as their accounts become too costly to maintain.  “As a result, it can be increasingly difficult to wire funds internationally,” he said.


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