Faced with Enforcement Action Uptick, Regulators Turn to Independent Audits for AML Oversight

By Brian Monroe

Broad compliance problems at U.S. financial institutions have forced bank regulators to increasingly rely on independent audits in their reviews of anti-money laundering programs, according to government officials and consultants. The shift, which coincides with a sharp rise in enforcement actions tied to lending practices and capital requirements, has also led regulators to push banks and their third-party auditors to draft more detailed audits, at times to the surprise of compliance departments, said Maureen Young, a lawyer for Boston-based law firm Bingham McCutchen LLP. Examiners are looking for independent auditors to be "their long arms in the institution" in instances...