The Bank Secrecy Act and and the AML Act of 2020

Bank Secrecy Act (Title 31)
Regulations: Enforcement Priorities
and Compliance Issues Explored
Good Attorneys At Law, PA
Ari Good, JD LLM
President
Tuesday, October 19, 2021 2
FTI Consulting, Inc.
Maureen Kiedaisch
Senior Managing Director

Tax and blockchain lawyer Ari Good, JD LLM is the President of Good Attorneys At Law, P.A.
The firm’s tax services include corporate / partnership matters such as structuring domestic and
foreign entities for clients in industries ranging from payment processing to aviation to technology.
The firm’s blockchain services include advising on BSA (Bank Secrecy Act) matters such as KYC
/ AML requirements, contract law, international law and niche blockchain taxation matters.
FTI Consulting is an independent global business advisory firm dedicated to helping organizations
manage change, mitigate risk and resolve disputes: financial, legal, operational, political &
regulatory, reputational and transactional. Individually, each practice is a leader in its specific
field, staffed with experts recognized for the depth of their knowledge and a track record of
making an impact. Collectively, FTI Consulting offers a comprehensive suite of services designed
to assist clients across the business cycle – from proactive risk management to the ability to
respond rapidly to unexpected events and dynamic environments.

Brief Speaker Bios:
Maureen Kiedaisch is a Senior Managing Director in the Financial Services practice within the
Forensic & Litigation Consulting segment at FTI Consulting. She is based in New York. Ms. Kiedaisch
has more than 25 years of experience in the banking industry and focuses her practice in the financial
services industry, providing clients with Bank Secrecy Act/Anti-Money Laundering/Office of Foreign
Assets Control and other regulatory compliance and operations-related services.
Ms. Kiedaisch leads BSA/AML reviews for banks, money service businesses, and other financial
service providers. She has been engaged on a variety of matters, including working on BSA/AML
program development and evaluation, BSA/AML monitorships, independent reviews and transaction
lookbacks. She has extensive experience developing and evaluating compliance and BSA/AML
policies and procedures to ensure compliance with regulations and best practices, as well as
performing risk assessments and evaluating and implementing internal controls.
Maureen Kiedaisch
Ari received his BA, With Distinction, from the University of Michigan in 1993. He graduated from the
DePaul University College of Law in 1997 as a Dean’s Scholar, finishing in the top 20% of his class.
Ari published in the field of intellectual property and the Internet, earning him the CALI Excellence For
The Future Award . He received his LL.M. in Taxation Law in 2005 from the prestigious University of
Florida masters program. Ari completed the Certified Blockchain Financial Analyst program at the
University of Nicosia, giving him a thorough grounding in blockchain business, regulation and
technology. Mr. Good is a Certified Anti-Money Laundering Specialist (CAMS), giving him insight into
compliance matters that matter most to FinTech startups and other businesses.
Ari Good, JD LLM
President

Regulatory supervision of reporting companies is expected to intensify with the
Anti-Money Laundering Act of 2020 (AMLA) amendment of Title 31 of the Bank
Secrecy Act (BSA). Title 31 revisions include new BSA violations and penalties
regarding incomplete or false reports and transactions that involve entities labeled
as “primary money laundering concerns.” Reporting requirements concerning
beneficial ownership and expansion of the U.S. law’s authority to subpoena foreign
banks have also been added.
This notable regulatory development underscores the need for companies to have
thorough record-keeping and reporting practices. They must also revisit their
compliance programs to mitigate lapses and thwart potential criminal activities.
In this LIVE webcast, financial regulatory compliance experts Maureen Kiedaisch
(FTI Consulting, Inc.) and Ari Good, JD LLM (Good Attorneys At Law, P.A.) will
provide a comprehensive discussion of the recent developments surrounding BSA
Title 31 regulations. Speakers will also present critical issues and best practices to
ensure compliance in today’s increasingly complex regulatory landscape.
Some of the major topics that will be covered in this course are:
• Bank Secrecy Act (Title 31) Revisions Under the Anti-Money Laundering Act of
2020 (AMLA)
• Key Enforcement Priorities
• Red Flags and Critical Issues
• Best Compliance Practices
• An Outlook

SEGMENT 2:
Maureen Kiedaisch
SEGMENT 1:
Ari Good, JD LLM
President

SEGMENT 1:
Ari Good, JD LLM
President
Good Attorneys At
Law, PA
AML/CFT Law Gets a Facelift –
The Anti-Money Laundering Act of 2020
Division F of the National Defense Authorization Act
Most significant modification of anti-money laundering law in the US since the Patriot Act of 2001
Primary Purposes:
(i) Gives government significant enforcement authority to address financial crimes;
(ii) Adopts a preventative, rather than reactive, stance towards the goals of the Bank Secrecy Act;
(iii) Imposes beneficial owner information recording and reporting rules;
(iv) Adds significant “teeth” to penalties for violating anti-money laundering law;
(v) Increases the number and types of actors / businesses subject to the BSA.
What we’ll cover today:
• Overview of the Act’s primary provisions
• What the world may look like following the implementation of the AMLA
• Some practical challenges in its implementation
• How virtual currencies fit into the new regime
Bank Secrecy Act (Title 31) Regulations: Enforcement
Priorities and Compliance Issues Explored

SEGMENT 1:
Ari Good, JD LLM
President
Good Attorneys At
Law, PA
What is in the AMLA?
• Codification of the FinCEN guidance – a “risk-based approach” to financial institutions’ approach to AML / CFT, with an emphasis
on prevention over observation
• “Modernization” of the AML / CFT body of law:
• Emphasis on technology and automated processes
• Formal review of CTR / SAR requirements – Are they useful?
• Expanded BSA coverage
• Antiquities dealers (now “financial institutions”)
• Virtual Currencies, Virtual Asset Service Providers
• Expanded Enforcement
• Subpoena authority over foreign banks with US correspondent accounts (internationalization)
• Increased penalties for BSA violations
• Significantly increased fines, penalties and bars on repeat offenders serving on executive boards
• Anti-fraud provisions
• Whistleblower incentives and protections
• Beneficial Ownership Information – The Corporate Transparency Act
• “Plugging the hole” in US AML/CFT regime
• “Reporting Companies” must collect and report information on those who exercise “substantial control”, or those who own or control
25% or more of the ownership interests of the entity
• FinCEN database

SEGMENT 1:
Ari Good, JD LLM
President
Good Attorneys At
Law, PA
How Will the Post-AMLA World Look
Hurry up and wait – A great deal of the implementation of the AMLA will depend on the
United States Treasury and regulations to come
Some of this is familiar – Intention to be complimentary, not duplicative
Beneficial ownership information and the Customer Due Diligence (CDD) and Customer
Identification Program (CIP) rules:
Corporate Transparency Act CDD Rule
Social security numbers not specifically required data
(FinCEN identifier)
Social security numbers required for customers and
beneficial owners
Requires collection of information from “Reporting
Companies” (Corp, LLC, “other similar entity”,
statutory exemptions)
Requires collection of information from “Legal Entity
Customers” except largely for publicly traded
companies
Periodic confirmation of beneficial ownership
information
Account opening as a trigger for collection of
information

SEGMENT 1:
Ari Good, JD LLM
President
Good Attorneys At
Law, PA
Potential Implementation Risks and Challenges
• Verification of data entered into the FinCEN database – data
integrity, reliability for financial institutions complying with their
CDD obligations, federal functional regulators and law
enforcement
• Database design – selecting the right fields
• Information security and hacker “honeypots”
• Ambiguity in the definitions of a beneficial owner: What is
“substantial control” over an entity?

SEGMENT 1:
Ari Good, JD LLM
President
Good Attorneys At
Law, PA
FinCEN Enforcement Priorities
Representative of the inter-governmental chatter that characterizes the law in this area – reliance on
consultations with other governmental entities and their reports
1. Corruption – Reference to prior FinCEN advisories on Nicaragua, South Sudan and Venezuela
– corruption by “senior foreign political figures” (think PEPs)
2. Cybercrime – “including relevant cybersecurity and virtual currency considerations”
3. Terrorist Financing, foreign and domestic
4. Fraud – Feeder for other types of criminal activity, increase in health-care related scams and
frauds during COVID
5. Transnational criminal organization activity
6. Drug trafficking
7. Human trafficking / smuggling
8. Proliferation Financing
Source: Anti-Money Laundering and Countering The Financing of Terrorism National Priorities
(June 30, 2021)

SEGMENT 1:
Ari Good, JD LLM
President
Good Attorneys At
Law, PA
Extension of the BSA to Art & Antiquities Dealers
• “Legitimate” art acquired via criminal devices & “Illegitimate” art – stolen or counterfeit
artifacts
• Very private, rarefied industry:
• Confidentiality
• Documentation of ownership history of cultural property & high value pieces
• Inconsistent due diligence practices
• Use of shell companies
• Portability, concealability, subjective value
• AMLA expands definition of “financial institution” to include “a person engaged in the
trade of antiquities, including an advisor, consultant, or any other person who engages
as a business in the solicitation or the sale of antiquities”
• FinCEN issued notice with guidance as to how and what to file with a SAR
• AMLA Section 6110 requires Treasury to conduct an art industry study on further
regulation

SEGMENT 1:
Ari Good, JD LLM
President
Good Attorneys At
Law, PA
Virtual Currencies and the AMLA
• Unequivocal expansion of Treasury’s jurisdiction over Virtual Asset Service Providers (“VASP”) for purposes of
the BSA
• What kind of animal is a “Convertible Virtual Currency” – cryptographically secure, peer to peer, decentralized
technology that features an immutable, pseudo-anonymous and publicly-available ledger
• Centralized finance (CeFi) and Decentralized Finance (DeFi) – What are the differences? DeFi and financial
crimes investigations.
• Hosted vs. Unhosted wallets
• Crypto and money laundering – Fact or fiction?
• Overwhelming majority of financial crime still rooted in the traditional financial system
• Bad place to go if you’re trying to keep a secret
• Ransomware issue / Colonial Pipeline, JBS / “Double Threat” of ransom + disclosure
• “Red Flags” from FinCEN and FATF – Includes Bitcoin ATMs
• Who cares?
• Priority matter for numerous US and international regulatory and standard-setting bodies
• What should you do when dealing with crypto-related businesses

SEGMENT 1:
Ari Good, JD LLM
President
Good Attorneys At
Law, PA
Reporting Requirements for
Virtual Currency Transactions
• FinCEN relying on AMLA legislation as authority to define CVCs
as “value that substitutes for currency”, and therefore “monetary
instruments”
• FinCEN proposing to add a new provision (31 C.F.R. 1010.316)
and amend various existing CTR provisions
• CTR-like reporting rule for transactions above $3,000
• Counterparty rule for transactions exceeding $10,000, except for
transactions between regulated entities
• Obligation to file SARs as in other types of transactions

SEGMENT 1:
Ari Good, JD LLM
President
Good Attorneys At
Law, PA
In Summary
• The AMLA put the BSA on steroids, rather than replacing the
BSA with something different.
• Fundamental obligations of Financial Institutions are still, for the
moment, largely the same pending new regulations.
• We are still early in the process – Keep an eye on FinCEN,
OCC, FATF and DOJ for implementation and developments.
• Virtual currencies are here to stay.

SEGMENT 2:
Maureen Kiedaisch
Topics
• Conducting Due Diligence on Financial Technology Companies
• Use of Artificial Intelligence in AML Compliance Programs
• Using data to enhance your AML Risk Assessment

SEGMENT 2:
Maureen Kiedaisch
Conducting
Due Diligence
on Financial
Technology
Companies

SEGMENT 2:
Maureen Kiedaisch
Conducting Due Diligence on Financial
Technology Companies
In August 2021, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal
Deposit Insurance Corporation (collectively, the agencies) published Conducting Due Diligence on Financial Technology Companies: A
Guide for Community Banks. This guide supports responsible innovation within the federal banking system by providing community banks with
information that may be relevant when conducting due diligence on financial technology companies.
While this guide is designed for community banks and their relationships with fintech companies, the content may be useful for banks of any size
and for other types of third-party relationships.
Highlights:
 provides information relating to six common areas of due diligence discussed in existing supervisory guidance.
 focuses on general considerations, potential sources of information, and illustrative examples that may be relevant for conducting due
diligence on a financial technology company.
 reiterates that the scope and depth of due diligence performed depends on the risks posed by each third-party relationship and the nature
and criticality of the prospective product, service, or activity (collectively, activity).
Banks of all sizes are forming greater and deeper relationships with third parties to remain competitive, fulfill strategic goals and objectives, and
help meet consumers' needs. Companies specializing in financial technologies (or fintech) may provide technical capabilities for banks to offer
new or enhanced products and services, establish new delivery channels, improve bank processes, and remain competitive in a changing
industry. These relationships can present an attractive alternative to a bank building a product, service, or activity in-house and are particularly
relevant for community banks that may not have the requisite resources to otherwise reasonably consider developing or engaging in such
activities on their own.

SEGMENT 2:
Maureen Kiedaisch
-Business
Experience and
Qualifications
oBusiness
Experience
oBusiness Strategies
and Plans
oQualifications and
Backgrounds of
Directors and
Company Principals
-Financial
Condition
oFinancial Analysis
and Funding
oMarket
Information
-Legal and
Regulatory
Compliance
oLegal
oRegulatory
Compliance
-Risk
Management and
Controls
oRisk Management
and Control
Processes
-Information
Security
oInformation
Security Program
oInformation
Systems
-Operational
Resilience
oBusiness Continuity
Planning and
Incident Response
oService Level
Agreements
oReliance on
Subcontractors

SEGMENT 2:
Maureen Kiedaisch
- Key Takeaways
o The bank is ultimately responsible for conducting its activities – including activities conducted through a third party – in a
safe and sound manner.
o Banks should periodically re-evaluate their risk tolerances and make any necessary adjustments or enhancements to their
third-party risk management policies and practices in order to continue to meet the Agencies’ expectations for the
evaluation, selection and management of third-party relationships with FinTech companies.
 This guidance isn’t all together new, it reiterates most of existing guidance. Banks with a well-developed compliance
program and third-party risk management program – guidance in this case should be used to evaluate existing
program, identify gaps, and remediate.
o Risk management practices should be implemented that are commensurate with the risk posed by the third-party
relationship.
o The guidance defines a third-party relationship as “any business arrangement between the banking organization and
another entity, by contract or otherwise”.

SEGMENT 2:
Maureen Kiedaisch
- Challenges
o Start-up Fintech
 Fintech companies with little history, not yet profitable, and/or lack of audited financials.
o Lack of experience in the banking industry
 A fintech company may not have experience in the highly regulated banking industry.
 A fintech company may not have experience interacting with banking regulators.
o Secret Sauce
 Fintech companies may be unwilling to provide certain information that it deems to be proprietary in nature.
o Early / expansion stage
 Fintech companies’ Audit, Risk and Compliance functions may be in early stages of development.
 Are the fintech companies’ information security processes appropriate based on the risk of the activity?
o Critical Bank Functions
 The more critical the activity conducted by fintech companies, the higher the risk for the bank - impacting customers,
shareholders and other stakeholders.

SEGMENT 2:
Maureen Kiedaisch
Use of Artificial
Intelligence in
AML Compliance
Programs

SEGMENT 2:
Maureen Kiedaisch
Use of Artificial Intelligence in
AML Compliance Programs
In December 2018, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, the Financial Crimes Enforcement Network (FinCEN), and the National Credit Union Administration issued a
statement encouraging banks to take innovative approaches to meet their Bank Secrecy Act/anti-money laundering (BSA/AML)
compliance obligations and further strengthen the financial system against illicit financial activity.
Financial Institutions are looking to use artificial intelligence (AI) to:
 Alleviate compliance burdens by increasing efficiency and reducing time required to onboard customers / investigate red flags
 Drive down costs and increase compliance in the face of increasing regulatory scrutiny
Financial crime and the costs to combat it are rising!
 According to the United Nations Office on Drugs and Crime, financial crime accounts for around 3.6 percent of global GDP, or around $2.1
trillion each year (other reports have it has high as 5% GDP).
 According to a report by Europol, just around 10% of the suspicious transaction reports filed by financial services institutions lead to further
investigation by competent authorities.
 Banks are spending hundreds of millions on traditional compliance programs while, according to the Boston Consulting Group, penalties
worldwide topped $321bn between 2009 and 2016.

SEGMENT 2:
Maureen Kiedaisch
According to the Digital Banking Report, 35% of financial organizations have deployed at least one machine learning solution. In FTI’s own
resilience barometer survey, 52% of responding financial organizations self-reported using AI or machine learning in some capacity.
Benefits of Adopting AI in Banking
o Uses
 Front-end system: obtain customer identities, deepen digital interactions and engage customers across channels
• Better customer experience
 Back-end: assist employees, automate processes and pre-empt problems
• Lower costs, free up personnel
 Mid-office: Fraud identification, AML transaction monitoring, sanctions screening, know your customer (KYC) checks
• Improve compliance effectiveness and lower costs
• Reduce number of false positives detected by traditional parameter-based transaction monitoring systems
o Capabilities
 Analyze large amounts of data, to filter out false alerts and identify complex criminal conduct
 Identify connections and patterns too complex for straightforward, rule-based monitoring or the human eye
o Possibilities
 According to a report from Autonomous, AI could save the banking industry more than $1 trillion in projected cost savings by 2030.
 The report ‘Augmented Finance & Machine Intelligence’ notes that over the next 12 years, traditional financial institutions could
reduce their costs by 22 percent.

SEGMENT 2:
Maureen Kiedaisch
Challenges of Adopting AI in Banking
o Ethical Concerns
 Algorithmic bias and decision making
o Regulatory Acceptance and Potential Regulatory Issues
 Bank secrecy and data protection laws can restrict the type of information that can flow into centralized systems that rely
on machine learning.
o Reliability
 Regulators need to be convinced, the benefits need to be proven and stakeholders need to be comfortable with AI
behaviors and results within risk tolerances.
o Cost of Migration to AI – Getting it Right
 Quality of data inputs, selecting the right use-case, scaling successful proofs of concept, and integrating IT infrastructure
o Information Security
o Third-Party Risk Management

SEGMENT 2:
Maureen Kiedaisch
Using Data to
Enhance Your
AML Risk
Assessment

SEGMENT 2:
Maureen Kiedaisch
Use of Data in AML Risk Assessments
In September 2020, the US Treasury Financial Crimes Enforcement Network (FinCEN) issued an Advance Notice
of Proposed Rulemaking (ANPRM) to solicit public comment on a wide range of questions pertaining to potential
regulatory amendments under the Bank Secrecy Act (BSA). The proposals under consideration are intended to
provide financial institutions greater flexibility in the allocation of resources and greater alignment of priorities
across industry and government, resulting in the enhanced effectiveness and efficiency of anti-money laundering
(AML) programs. Additionally, the ANPRM also seeks comment on proposals to impose an explicit requirement
for a risk assessment process.
BSA/AML regulatory developments and trends underscore a persistent focus on risk-based approaches,
automation and tech solutions, and data quality and integrity. The foundation for a strong BSA/AML compliance
programs starts with a well-developed risk assessment that appropriately addresses the bank’s risk profile.
Understanding the risk profile enables the bank to apply appropriate risk management processes to the BSA/AML
compliance program to mitigate risk. Yet, risk assessments are among the most common deficiencies we find in
BSA/AML compliance program reviews.
Accurate and robust data plays a key role in providing a comprehensive analysis of a bank’s BSA/AML risks.

SEGMENT 2:
Maureen Kiedaisch
Overview - Developing a Risk Assessment
o Essential BSA/AM Risk Assessment Components:
 Program Governance and Oversight
 Customers and Entities
 Products and Services
 Geographic Locations
 Other
o Risk Assessment Methodology:
 Inherent Risks – risks associated with the components
 Controls – in place to mitigate risks (such as policies, procedures, detection and SAR
filings, monitoring, reporting, training, etc.)
 Residual Risks – result of controls on the inherent risks
What types of data that should be utilized?

SEGMENT 2:
Maureen Kiedaisch
Benefits
o Stronger Risk Assessment
 Supports the AML compliance program
o Better Insight
 Focusing on the right things
 Customers / Products / Geographies
o Ability to Enhance Controls
 Identify and mitigate gaps in controls
o Improved Results
 Audit
 Regulators

SEGMENT 2:
Maureen Kiedaisch
Challenges
o Quality of Data
 Garbage in / Garbage Out
o Change
 Build buy-in from all stakeholders
o Costs / Resources
 To develop knowledge / hire third-party
 To identify and remediate data
 To build process

SEGMENT 2:
Maureen Kiedaisch
Accreditation
Conducting Due Diligence on Financial Technology Companies
o Conducting Due Diligence on Financial Technology Companies – A Guide for Community Banks https://www.fdic.gov/news/press-
releases/2021/pr21075a.pdf
o Lessons Learned from the Banking Agencies’ Guidance on Banks’ Due Diligence of FinTech Companies
https://www.arnoldporter.com/en/perspectives/publications/2021/09/lessons-learned-from-the-banking-
agencies?utm_source=Mondaq&utm_medium=syndication&utm_campaign=LinkedIn-integration
o Know your fintech: Banking agencies issue guide on conducting fintech due diligence https://www.davispolk.com/insights/client-
update/know-your-fintech-banking-agencies-issue-guide-conducting-fintech-due
Use of Artificial Intelligence in AML Compliance Programs
o Strengthening AML protection through AI (2018) https://www.financierworldwide.com/strengthening-aml-protection-through-
ai#.YVsk3prMJhE
o Regulators give nod to AI, emerging tech for AML programs (2018) https://www.complianceweek.com/technology/regulators-give-
nod-to-ai-emerging-tech-for-aml-programs/24727.article
o How to trust the machine: using AI to combat money laundering (2019) https://www.ey.com/en_us/trust/how-to-trust-the-machine--
using-ai-to-combat-money-laundering
o AI: The Double-Edged Sword in AML/CTF Compliance https://www.acamstoday.org/ai-the-double-edged-sword-in-aml-ctf-
compliance/

Maureen Kiedaisch
Maureen.Kiedaisch@fticonsulting.com
(646) 485-0592
Ari Good, JD LLM
President
info@goodattorneysatlaw.com
(877) 771-1131

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