New review of money-laundering rules to include input from banks

WASHINGTON Tue Nov 13, 2012 11:49am EST

WASHINGTON Nov 13 (Reuters) - Top banks, including Bank of America, will be part of a new government-led review of U.S. money-laundering rules, a top Treasury Department official said on Tuesday.

A group co-led by the director of Treasury's anti-money laundering agency, Jennifer Shasky Calvery, and Bank of America Corp executives will compare the actual risks in the financial system to the risks regulators have focused on, Calvery said in a speech at a trade conference.

The group will function as a subcommittee of the Bank Secrecy Act advisory group, a group of public officials and industry executives which advises Treasury on anti-money laundering compliance issues.

Other representatives from banks, broker-dealers and other financial institutions are expected to get involved with the new review, but the time frame for the review was unclear.

A Bank of America spokeswoman did not immediately respond to a request for comment.

Banks spend millions of dollars a year to comply with anti-money laundering rules, including reporting suspicious transactions to authorities, and the goal of the new group is to build a "smarter, more cost-efficient" system, Calvery said at the American Bankers Association anti-money laundering conference.

Banks have long been concerned they spend more time making sure they comply with the letter of regulations, than they do looking for illegal transactions.

Calvery told reporters a common refrain she heard from the industry was: "We spend quite a bit of money dealing with the places that our regulators are asking us to look... and we're not convinced those places are always the same places as where the actual illicit financing risk may be."

Money-laundering issues have caused major banks to stumble in recent years. HSBC last week announced it had set aside $1.5 billion to cover potential money laundering fines.

The new review, Calvery said, will feed into a larger task force the Obama administration announced Monday to examine the sprawling net of anti-money laundering rules and fix gaps or redundancies.

Calvery joined Treasury's Financial Crimes Enforcement Network (FinCEN) in September from the Justice Department, where she ran its asset forfeiture and anti-money laundering unit.

Industry executives had worried that that background meant Calvery's focus at the agency would be stepping up enforcement. The new public-private review appears to be a way to soothe such concerns.

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