The Financial Crimes Enforcement Network (FinCEN) has imposed more than $600 million in fines for anti-money laundering (AML) violations in just 14 months (from January 2021 to March 2022). Recent data released by FinCEN suggests that depositary institutions and money service businesses (MSB) are increasingly reporting more suspicious activity.
There are a few categories of suspicious activity where increases are more pronounced, two of these are “questionable or false identification” and “suspicious concerning the source of funds.” The former is a particular concern for MSB as filings increased from 2,074 in 2018 to 14,432 in 2019, and the latter is the top priority for depositary institutions.
This data puts the spotlight in the company’s customer due diligence process (CDD). According to FinCEN, and the Ban Secrecy Act regulations, companies need to maintain an AML program with robust CDD rules to verify the identity of the natural persons of legal entity customers who own, control, and profit from companies when those companies open accounts. The CDD rules should enable companies to classify customers in different risk profiles and raise flags when a transaction may be suspicious.
PYMNTS has looked at the AML enforcement actions carried out by FinCEN for the last year to see if the lack of an adequate CDD process contributed to the final decision that a company “failed to implement and maintain an anti-money laundering program that met the minimum requirements.”
The short answer is yes — all the decisions included references to weak or inadequate CDD processes that facilitated or could have facilitated suspicious transfers.
The most recent case is FinCEN vs USAA Federal Savings Bank, where the bank was fined $140 million for not having a good AML program in place. In this case, the bank failed to report thousands of suspicious transactions and it didn’t have a proper compliance program. As for the CDD process, the FinCEN said the bank’s CDD policies were “deficient.” For example, information obtained at account opening was insufficient to assess a customer’s risk and support effective suspicious activity monitoring. This resulted in the development and use of a critically flawed customer risk score model, which the bank employed to assess customer risk and identify high-risk accounts. FinCEN determined that “this in turn caused customer-specific and overall BSA/AML risks to be severely and materially underestimated.”
In another case where FinCEN fined CommunityBank of Texas $8 million, the bank performed CDD in part, through its automated AML monitoring system and in part with questionnaires filled out by front-line staff. Concerns were identified because these questionnaires were not updated when the circumstances of the client changed, or they were poorly updated. Nonetheless, FinCEN took into account that the bank had an AML program in place, and it conducted an external examination of its AML program with satisfactory results.
One of the most notorious cases was the $390 million fine against Capital One. In this case there were several elements that contributed to the failure to comply with the minimum requirements for an AML program. Capital One had a risk-based approach to identify high-risk profile customers, but the system failed to fully enable the bank to understand the nature and legitimacy of its customers’ activity and patterns. For example, if the system identified a high-risk individual but the activity appeared to be related to the business model or had a ready explanation for deviations outside the “consistent” volume marker, the activity was deemed “reasonable,” and the initial high-risk alert was closed without further action. As a result, Capital One failed to detect red flags or follow up on potential suspicious activity.
The last example, and one of the first with a company providing crypto services, is the $100 million fine imposed to BitMEX. In this case, BitMEX didn’t have a CDD process or a Customer Identification Program either. The company didn’t collect or verify information of its customers and it refused to change its policies to comply unless “under significant government pressure.” It didn’t conduct due diligence to develop a customer risk profile or make a risk-based decision and allowed customers to create accounts with only an email address.
This analysis of FinCEN’s recent decisions confirms that a CDD process is an important part of an AML program and regulators look at the company´s procedures. Yet, in all these cases, a deficient CDD was not the only reason to determine that a company failed to comply with the minimum requirements for a good AML program.
Read more: FinCEN Data Shows Increase in Identity-Related Filings, Stressing Importance of KYC Programs
As the calendar flips to March, college basketball fans are gearing up for another exhilarating NCAA tournament.
In the future, artificial intelligence and cutting-edge technology could change March Madness as we know it. Let’s break down how the digital revolution could transform the Big Dance.
AI is already being used to predict brackets. Gone are the days of agonizing over your picks based on team mascots or your alma mater’s colors. In 2025, AI-powered bracketology is the name of the game. Fans can use algorithms that crunch data points, from player statistics to historical upset probabilities, all at the click of a button.
But beware, bracket enthusiasts. While these AI tools promise to boost your chances of winning the office pool, they can’t account for the quintessential March Madness chaos. You know, the instance where AI can predict everything except the inevitable Cinderella story that ruins everyone’s bracket by the second round.
In a move that would be sure to ruffle some feathers, AI-generated commentary could be used for games. Digital play-by-play announcers would never need a bathroom break and potentially be able to recall obscure statistics from the 1957 tournament in an instant.
Can’t make it to the Final Four? Ten years from now, games might happen in a digital stadium, Forbes reported. With virtual reality (VR) technology, fans could experience the thrill of courtside seats from the comfort of their living rooms.
“AI-generated athletes, inspired by the procedural generation techniques of video game developers … could perform in virtual arenas, exhibiting strategies and plays conceived by advanced predictive algorithms,” Forbes reported.
Just be careful not to get too caught up in the moment with streaming. Wouldn’t want to have reports of fans attempting to rush the virtual court after buzzer-beaters have led to an uptick in living room injuries — especially when that flat screen falls over.
While human coaches still call the shots, AI assistants could one day be indispensable members of the coaching staff. In the next five years, these digital strategists could analyze opponent tendencies and more.
“Building on existing technologies … AI will provide coaches and players with intricate, multi-dimensional data patterns that dramatically enhance both offensive and defensive strategies,” Forbes reported. “These advanced algorithms will analyze vast datasets from numerous games to uncover hidden trends, strategic insights, and predictive cues about opponents’ potential moves.”
Say goodbye to controversial calls. Advanced computer vision systems could assist referees in making split-second decisions, from determining if a player’s toe was on the line for a three-pointer to detecting the slightest touch on a blocked shot.
The Hawk-Eye system is already used in tennis and cricket to help determine fouls, Viso.AI reported.
“This system uses a network of cameras to track the ball and then compares the trajectory of the ball to a virtual model of the playing surface,” the report said. “This system is accurate within a few millimeters, which is much more accurate than the human eye.”
As we dive into March Madness 2025, it’s clear that technology will change the way we experience the tournament. From AI-powered brackets to virtual reality arenas, the digital revolution is coming for basketball. But at its core, the magic of March Madness remains the thrill of competition, the joy of unexpected victories, and the heartbreak of last-second defeats.
So, whether you’re relying on an AI to pick your bracket this year, or screaming at a holographic referee in the future, remember to enjoy the ride. In the unpredictable world of college basketball, sometimes the best strategy is to embrace the madness — digital or otherwise.
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