Slava Akselrud

SEC & FinCEN jointly proposed new rules requiring registered investment advisers (RIAs) & exempt reporting advisers (ERAs) to implement customer identification programs (CIPs).  This proposed rule is in addition to their February proposal to designate RIAs & ERAs as “financial institutions” under the Bank Secrecy Act (BSA) and subject them to AML/CFT program requirements.   The CIPs would require advisers to identify and verify the identity of their customers. #customeridentity #antimoneylaundering #compliance #fincen #sec https://lnkd.in/gtnQ6Q43

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iKinetiq RegWatch - OCC Enforcement Actions for September Stay updated on the OCC's latest enforcement actions & learn how iKinetiq's TPOC Risk Framework helps financial services avoid regulatory actions & fines. #finserv #OCC #regenforcement #regrisk #iKinetiq #TPOCrisk

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What I find most interesting about all of the BSA/AML monitoring consent orders is that whatever the case may be about how the varying agencies want the thing done, it is completely ineffective. In 2020, banks spent $180 billion (I bet that is an under-estimate) on AML monitoring. Meanwhile, the detection rate for money laundering crimes is estimated to be anywhere from 0.1% to 1.0%. To put it more concretely, one top 5 accounting firm's figure was that $499 of every $500 laundered is never detected. This amounts to "billions of dollars" in detected funds flows. Notice that it is always vague how much is laundered (estimates of $800bn to $2tn), how efficacious this is (see tenfold range above), and how many crimes are cleared by the labor-intensive way this is being done. At what true cost is this make-work, I would ask. You have what the banks spend on the programs. We can estimate what portion of bank exams and regulatory staff are aimed at this issue. They fine the banks probably $10 billion per year for ineffective programs, too. Add to that training expense and materials creation for the purpose. Finally, an end-around the 4th Amendment isn't something that can even be quantified. It's a cottage industry. It's a path dependency, too - we can't think outside of rulesets and bodies watching the flows. I hope for change in the future on these questions. Because this is an ugly apparatus, by most metrics.

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