Remembering 9/11 – A Pivotal Day for BSA/AML Professionals

Terri Luttrell, CAMS-Audit
September 10, 2021
Read Time: min

September 11, 2001 will stay with Americans forever.

This day was a pivotal point for all Americans, especially BSA officers and FinCrime professionals.

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Never Forget
The day that changed the world.

The events that unfolded in that bright blue sky on September 11, 2001 will stay with Americans forever. Those old enough to know what was happening remember precisely where they were and what they were doing when they heard the news. The first plane hitting the Twin Towers, the second plane, the Pentagon, and then our heroes on Flight 93 crashing into a Pennsylvania field. Reflecting on the somber 20th anniversary of that tragic day, the impact it made on the financial crime sector is still prevalent today.  

FinCrime professionals around the country felt a significant change in their work lives because of the occurrences that day. The September 11 terrorist attacks on homeland soil were a pivotal point in the Bank Secrecy Act (BSA). The importance of fighting the war on terror within our U.S. financial system enhanced the criticality of detecting and reporting financial crime, including the financing of terrorist acts against our country. 

Before 9/11
BSA through the years.

Before the September 11 attacks, the BSA did not refer to terrorist financing as part of the illicit activity that law enforcement was concerned with preventing. Terrorist financing was expected in other financial systems around the globe, not to be prevalent in the U.S. The 9/11 Commission Report mandated by Congress after the attacks exposed this misconception, proving that the financing of the terrorists did flow through the U.S. financial system. 

Enacted by Congress in 1970, the BSA was the initial anti-money laundering legislation first known as the Currency and Foreign Transactions Reporting Act. BSA was intended to detect illicit activity through cash and monetary instruments to catch tax evaders using secret foreign bank accounts. After a few years of court battles over specific privacy laws, the Currency Transaction Report (CTR) became mandated by the BSA in 1976. The role of BSA staff was typical compliance and very task-oriented. Completing and submitting forms to FinCEN without investigation or law enforcement contact was the general rule. 

As decades went on, the BSA turned a broader eye on illicit activity, with the drug trade continuing to increase in the U.S. The Suspicious Activity Report (SAR) was introduced in 1996 and required financial institutions to report all suspected illegal activity to FinCEN. BSA teams began hiring for skill sets that included analytical and investigative thinking. Still, terrorist financing was not a category available on the SAR form and not a severe threat that FinCrime professionals considered in their daily investigations. 

Stay up-to-date on the latest FinCEN Priorities. See Part I: Implications for Community Financial Institutions.
Read Now
Criminalizing Terroism Financing
USA PATRIOT Act enacted

After the 9/11 attacks, notably the quickest passing of a bipartisan law was enacted. The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act) was signed into law on October 26, 2001, just over a month after the attacks. (October 26 is now nationally recognized as BSA/AML Day.) This was the first legislation that criminalized terrorist financing and equated it to money laundering, with strong regulatory requirements attached, requiring financial institutions to implement AML programs, including Customer Information Program (CIP), due diligence procedures, and information sharing requirements.   

The USA PATRIOT Act immediately changed the everyday work life of FinCrime professionals. BSA departments grew significantly with the new requirements, and new programs were immediately developed and refined. BSA Officers were now required to be approved by the Board of Directors, have the necessary experience and qualifications, and have the appropriate authority to administer the financial institution’s BSA/AML program. Regulatory scrutiny became ever-present, knowing that the security of their homeland was at stake.

The importantance of the BSA tole came to be paramount to the entrie risk management program and included as part of the federal safety and soundness examinations.

BSA continued to evolve into an even more significant endeavor with the 2018 passing of the customer due diligence final rule and beneficial ownership requirements. If that wasn’t enough on the shoulders of FinCrime professionals, the Anti-Money Laundering Act of 2020 (AMLA) was passed on January 1, 2021, to strengthen and modernize the BSA, and is expected to bring about the most substantial changes within the BSA since the USA PATRIOT Act. AMLA also explicitly includes Combating the Financing of Terrorist (CFT) along with AML.    

Be Prepared
BSA officers and FinCrime professionals are more important than ever.

The job of a BSA Officer and other FinCrime professionals is not an easy one. The position often includes long work hours, and although salaries have increased in this area, financial institutions generally remain conservative with their compensation structures. However, the importance of this risk management function is not only essential to the financial institution, but also critical to our country, our communities, and our loved ones. The current Taliban takeover in Afghanistan is concerningly correlated to the pre-9/11 activities of the terrorist activity in that region, and many high-level government officials and law enforcement believe that future terror attacks are imminent. It is time now for FinCrime professionals to sharpen their tools, train their staff, and be diligent to the red flags of terrorist financing. The Financial Action Task Force (FATF) has a complete resource page devoted to combatting terrorist financing and is an excellent resource to share with BSA, compliance, and FinCrime teams. FinCrime professionals should be ready to catch illicit transactions in their financial institutions and get law enforcement involved before a new nightmare occurs, particularly on U.S. soil.    

About the Author

Terri Luttrell, CAMS-Audit

Compliance and Engagement Director
Terri Luttrell is a seasoned AML professional and former director and AML/OFAC officer with over 20 years in the banking industry, working both in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size.

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