Case Study On Enhancing Anti-money Laundering Compliance Program Of Bank A

In 2016,Bank A,the US branch of a large commercial bank in China,was fined US$215million by the New York State Department of Financial Services(NYDFS)for violating US anti-money laundering(AML)regulations.This incident is the first case in which an overseas institution of the Chinese-funded bank has been fined for violation of anti-money laundering regulations.Along with economic globalization,money laundering risks are spreading internationally.Due to the key role of the commercial banks in AML,regulators around the world,especially in the U.S.,have been raising their compliance standards for AML.Therefore,the banks are under tremendous money laundering risk and pressure of regulatory penalties.Unlike “Rules-Based Approach" in China,U.S.regulators have adopted a "Risk-Based Approach ".They do not prescribe AML rules for financial institutions,but rather allow them to adopt individualized strategies to ensure the effectiveness of AML program.In this context,it’s necessary to develop effective AML strategies and build a comprehensive AML program to meet the regulatory requirements for overseas branches of large transnational commercial banks in China.This article uses case analysis,comparative research,quantitative analysis and literature review,combined with the author’s practice in large bank,analyzes the background,necessity,current situation and shortcomings of bank A’s AML program,and uses Enterprise Risk Management theory to propose improvements.First,the author introduces the background and impact of Bank A’s incident.The article analyzes the regulatory environment in United States and the trends of AML standards,especially the AML compliance regulations in the United States,and the side effects of the incident.Then,the article points out the reasons for the penalties,including,disregarding regulatory recommendations/warnings,failure of using remittance transaction reports in accordance with regulations,and having a dysfunctional AML internal control mechanism.The root cause,however,is that Bank A is unfamiliar with the overseas AML compliance ecology,unsuited to the US AML regulatory ecology,and unfamiliar with the US AML regulatory requirements.So that failed to establish an effective Risk-Based AML program.Finally,the author proposes strategies to improve Bank A’s AML program based on its shortages.According to the regulatory environment and the latest international AML compliance standards,the Enterprise Risk Management theory is used for proposing suggestions,including: working closely with the regulatory authorities and always maintain great communication with them,actively adapting to overseas AML compliance Ecological,and incorporating money laundering risk management and internal control into Bank A’s Enterprise Risk Management from the perspective of Enterprise Risk Management theory.Eventually,Bank A achieves and maintains an effective AML compliance program which meets all the applicable laws and regulations.