The scale of financial crime continuously grows, with criminals’ becoming more sophisticated in their methods to launder the proceeds of crime. With this in mind, it is critical to understand what happens to non-compliant payment or card programs. To start, companies can get fined or penalized for not following compliant guidelines. This can occur if their systems are not enforced internally or are not adequate to meet the ever-changing methods criminals may utilize.
Not supporting the enforcement of the Bank Secrecy Act (“BSA”) and Anti-Money Laundering (“AML”), can result in enforcement actions such as civil and criminal penalties. Not only will the organization be held responsible, but the individual will be held accountable as well. The severity of punishment depends on the type of violation, and how the company is willing to correct the issue. To give you an idea of the severity, a single failure to report an incident can result in a conviction of up to 5 years in prison, a fine, or both.
For example, 12 of the world’s top 50 banks were fined for non-compliance in AML/KYC sanctions just in 2019 alone. In the most expensive case in the United States, which was prosecuted by the Department of Justice, a financial institution had to pay over $1.3 billion in fines.
Another example involved a Swiss bank that was fined $5.1 billion after pleading guilty for money laundering. They specifically failed to report suspicious transactions in customer accounts. The US regulators discovered that the institution had made 2,600+ outbound US dollar payments valued at $8.3 billion to high-risk countries. This infraction in particular was related to regulations established by the Office of Foreign Assets Control (“OFAC”).
To stay in compliance with OFAC, an organization must implement a process to regularly check potential account holders against a special list of individuals and organizations identified as affiliated with, owned by, controlled by, or acting on behalf of a sanctioned country. The list also includes terrorists and drug traffickers who are not associated with a specific sanctioned country but still cannot utilize the financial or payment system.
OFAC related violations can be very extreme and offenders are held liable with significant penalties. This is regardless of whether the offending activities were due to negligence or carelessness. Punishment for non-compliance includes civil penalties of up to $1,075,000 per violation; criminal penalties with fines up to $10,000,000, and even up to 30 years in prison. OFAC also publishes the names of organizations that have been penalized, which will also result in additional reputational damage.
Cascade takes our responsibility to protect our clients and ourselves very seriously, especially when it comes to being compliant with BSA/AML and OFAC. We want to ensure our clients not only continue to operate their payment programs, but also to ensure they stay on the right side of the law. Don’t have a compliance team that can manage all of that? Contact us to learn about our complete package of compliance related services, and together we can keep your payments program compliant while keeping criminal elements at bay.