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Director Support

Jim Richards … demonstrated and specialized experience with all BSA/AML matters, including multi-agency BSA/AML Part 30 actions, 15-Day Letters, Consent Orders, Deferred Prosecution Agreements, and all aspects of BSA/AML program remediation, including transaction reviews and look-backs.

Most BSA/AML Consent Orders require senior management to conduct remediation of the known program deficiencies through detailed Action Plans. But it is the directors, not senior management, who are ultimately responsible. Three OCC BSA/AML Consent Orders are illustrative: the April 2012 Citibank Consent Order, the October 2015 US Bancorp Consent Order, and the November 2015 Wells Fargo Consent Order:

“The Board shall ensure that the Bank achieves and thereafter maintains compliance with this Order, including, without limitation, successful implementation of the BSA/AML Action Plan. The Board shall further ensure that, upon implementation of the BSA/AML Action Plan, the Bank achieves and maintains an effective BSA/AML compliance program, in accordance with the BSA and its implementing regulations. In order to comply with these requirements, the Board shall require corrective action be taken in a timely manner for any non-compliance with such actions and follow-up on any non-compliance with such actions in a timely and appropriate manner.” [Article III of each Order].

In addition to the responsibilities of the Board, these three Consent Orders – and most BSA/AML Consent Orders – call for the Board to:

“… maintain a Compliance Committee of at least three (3) directors, of which at least two (2) may not be employees or officers of the Bank or any of its subsidiaries or affiliates … The Compliance Committee shall be responsible for monitoring and coordinating the Bank’s adherence to the provisions of this Order. The Compliance Committee shall meet at least monthly and maintain minutes of its meetings … the Compliance Committee shall submit a quarterly written progress report to the Board setting forth in detail the actions taken to comply with each Article of this Order, and the results and status of those actions.” [Citibank Consent Order: the US Bancorp Consent Order from October 2015 had “coordinating and monitoring”, and the November 2015 Wells Fargo Consent Order had “overseeing and monitoring”].

So the duties and obligations of Directors are prescribed, onerous, and generally beyond the day-to-day experiences and expertise of those Directors. This was implicitly recognized in the Citibank Order, which provided that “any independent consultant … engaged by the Bank or the Board to assist in the assessment of the BSA/AML Action Plan or other compliance with this Order must have demonstrated and specialized experience with the BSA/AML matters that are the subject of the engagement, and must not be subject to any conflict of interest affecting the consultant’s independence.”

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