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Casey Discusses Anti-Money Laundering Initiatives

Commissioner Kathleen Casey spoke at a recent regulatory training program about the SEC's anti-money laundering efforts. The SEC ensures industry participants' compliance with anti-money laundering requirements through its examination program and, if necessary, through its enforcement program. The SEC is also a "consumer of financial intelligence," she said. Securities fraud is a predicate offense to money laundering, Casey explained, and law enforcement is increasingly focused on those who conceal the illegal proceeds of securities fraud.

Casey said that the effectiveness of regulators and law enforcement authorities relies to a large degree on the industry's ability to recognize and report suspicious activity. Regulators and law enforcement authorities must share financial intelligence on a real-time basis, she added.

The SEC last December conducted an anti-money laundering program in Santo Domingo attended by industry professionals from 18 Latin American and Caribbean countries. Casey said the SEC's work with its fellow regulators makes it more difficult for terrorist organizations to penetrate the financial markets. Casey reported on the success of the SEC's relationship with Financial Crimes Enforcement Network since entering into a 2006 memorandum of understanding. The MOU established a framework for information sharing with respect to anti-money laundering.

Casey said the Bank Secrecy Act Review Group, which is comprised of SEC enforcement staff and personnel from the Office of Compliance Inspections and Examinations, reviews suspicious activity reports daily. The group has reviewed over 11,000 suspicious activity reports which has led to enforcement, examinations and self-regulatory organization referrals, she said.

Many regulated securities firms are affiliated with banks, so the SEC shares information and conducts joint examinations with the federal banking regulators. This cooperative approach promotes consistency in interpretations and examination coverage, Casey explained, and may also prevent any weaknesses from developing between regulatory boundaries.

The SEC and FINRA meet every quarter to discuss examination trends and their anti-money laundering regimes, according to Casey. The staff consults more frequently on an informal basis. Casey said the SEC plans to participate in additional joint training exercises. Anti-money laundering is a major focus area for securities examiners, she advised.

The industry serves as the first line of defense, Casey said. The regulators have provided information resources to help securities firms with their anti-money laundering compliance. Based on the examinations that have been completed, Casey said that firms are taking their anti-money laundering obligations seriously. The SEC's job is not only to catch firms when they do the wrong thing, she said, but also to help them do the right thing.