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From Banking and Finance Law Daily, June 2, 2015

State Street Bank must revise Bank Secrecy Act compliance program

By Colleen M. Svelnis, J.D.

Under an agreement with the Federal Reserve Bank of Boston and the Massachusetts Division of Banks, State Street Bank and Trust of Boston, Mass., must develop and implement effective compliance risk management programs for Bank Secrecy Act/Anti-Money Laundering compliance. The Federal Reserve Board announced the agreement with State Street Corporation and State Street Bank and Trust Company. The Boston Fed’s enforcement action began as a result of “deficiencies” identified in the bank’s compliance risk management program during an inspection. Problems were identified with respect to Bank Secrecy Act/Anti-Money Laundering compliance in internal controls, customer due diligence procedures, and transaction monitoring processes.

Agreement terms. Under the agreement, State Street’s Board of Directors must submit a written plan to strengthen the oversight of the company’s firmwide compliance risk management program. The plan must be acceptable to the Boston Fed and the Massachusetts Division of Bank’s Commissioner of Banks who will serve as “supervisors” with regard to the bank’s completion of the agreement’s requirements.

In addition, State Street must submit:

  • a written revised program for compliance with all applicable BSA/AML requirements;

  • a written revised program acceptable to the supervisors for conducting appropriate levels of customer due diligence by the bank for itself and its subsidiaries;

  • a written revised suspicious activity monitoring program;

  • a written plan for the full installation, testing, and activation of an effective automated transaction monitoring system;

  • a plan to ensure firmwide compliance with the Office of Foreign Assets Control requirements;

  • written progress reports each quarter; and

  • written plans and programs for approval by the supervisors.

Additionally, within 30 days, the bank must hire an independent third party to conduct a review of account and transaction activity the bank conducted between April 1, 2013, and June 30, 2013, to determine whether suspicious activity involving transactions was properly identified and reported.

Companies: State Street Bank and Trust Company; State Street Corporation

MainStory: TopStory BankingOperations BankSecrecyAct EnforcementActions FederalReserveSystem MassachusettsNews

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