Abstract of AFS Perspective "No risk of money laundering in commercial lending? Think again." by Doug Skinner, AFS Director of Regulatory Compliance.

Over the past several years, banking organizations have been finding any number of ways to attract unwanted attention from regulators, from breakdowns in corporate governance to weaknesses in audit and internal controls. But the most common reason for attracting the wrath of the regulators -- as well as the area with arguably the most serious consequences -- has been violations of the Bank Secrecy Act (BSA) and breakdowns in associated Anti-Money Laundering (AML) controls.

Until September 11, 2001, the predominant focus of the BSA was on curtailing the use of the U.S. financial system for purposes of drug trafficking. The passage of the Patriot Act in October 2001 expanded the application of the BSA to terrorist financing and reinvigorated banks� BSA compliance efforts. But while most bank executives focus their BSA compliance efforts on areas such as branch operations, wire transfers, and cash management, the lending area is also ripe with risk and opportunity for potential abuse.

In this Perspective, AFS examines money laundering red flags in lending, key parts of federal legislation all lending personnel should be aware of, and offers some considerations for more effective BSA/AML compliance in lending.

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