AML/BSA Compliance using Google Cloud

What is AML/BSA Compliance?

AML/BSA compliance refers to the regulatory framework and practices to prevent money laundering and terrorist financing.

1. AML (Anti-Money Laundering): This involves a set of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. Financial institutions and many global companies that process large sums of money are required to monitor transactions and report suspicious activities.
2. BSA (Bank Secrecy Act): Enacted in 1970, the BSA requires U.S. financial institutions to assist government agencies in detecting and preventing money laundering. This includes maintaining records of cash purchases of negotiable instruments, filing reports of cash transactions exceeding $10,000, and reporting suspicious activity that might signify money laundering, tax evasion, or other criminal activities1 .

Together, AML/BSA compliance ensures robust systems are in place to identify and mitigate risks associated with money laundering and terrorist financing.

What is the cost or risk of not complying?

Violations of BSA/AML compliance can result in significant penalties.

• Willful violations of BSA regulations can incur penalties ranging from $57,317 to $229,269 .
• Violations of due diligence requirements can lead to fines up to $1,423,088.
• Recordkeeping violations related to funds transfers can result in penalties up to $21,039 .
• In severe cases, institutions can face criminal penalties up to $1 million or twice the value of the transaction involved.

The average penalty cost for breaking BSA/AML compliance can vary widely depending on the severity and nature of the violation. For example, in 2021, some of the largest fines for AML violations reached hundreds of millions of dollars.

How does Google Cloud support AML/BSA compliance?

Google Cloud recently launched "The Anti Money Laundering AI (AML AI)" . This is an API designed to assess AML risk. It helps identify risks more effectively, with fewer false positives and reduced review times. This API:

• Produces monthly risk scores
• Provides explanations for analysts, risk managers, auditors, and regulators
• Can replace or complement existing transaction monitoring systems
• Allows for integration with additional risk indicators

Google's AML AI uses no data other than what you provide. It does not use Google data to enrich your datasets. The accuracy and coverage of AML AI depend on the quality and completeness of the data you provide according to the AML AI schema, as well as the volume and quality of customer exit or suspicious activity report (SAR) data used for training.

In addition to this service, Google Cloud offers many other solutions to help enterprise organizations maintain BSA/AML compliance. These include advanced access management tools, data analytics, secure cloud storage, data governance and machine learning tools designed to enhance your compliance efforts.

Additional Google Services for AML/BSA Compliance

1. Identity Verification

Google Cloud Identity Platform: This service supports multi-factor authentication (MFA), allowing you to enforce additional layers of security. Users can authenticate using various methods, including SMS, email, and app-based authenticators.

Google Authenticator generates time-based one-time passwords (TOTP) for a second factor of authentication.

Security Key Enforcement supports the use of physical security keys (e.g., YubiKey) for phishing-resistant MFA, ensuring that only authorized users can access sensitive data.

Document AI: Utilize this for automated document processing, such as scanning and verifying identity documents, enhancing the accuracy and speed of customer onboarding processes.

2. Data Collection and Storage

Cloud Storage: Provides secure storage for customer data, transaction records, and compliance documentation. With encryption at rest and in transit, it ensures data integrity and confidentiality. Bucket-level IAM policies allow for fine-grained access control, IT managers and Cloud Administrators can securely store logs and safely share them with auditors.

BigQuery: Offers a robust solution for large-scale data storage and analysis with built-in encryption and advanced access controls. Many companies leverage BigQuery to perform petabyte scale data analysis of history data for auditing and monitoring purposes.

Cloud SQL: A fully managed relational database service that simplifies database administration tasks such as backups, replication, and patch management. It ensures data integrity and availability with built-in encryption and automated backups. Role-based access controls (RBAC) restrict access to sensitive information, ensuring compliance with AML/BSA regulations. Some companies use CloudSQL to store user-IDs and serialized system access snapshots.

Cloud Spanner: Provides global distribution and strong consistency, making it ideal for managing large volumes of transaction data across multiple regions. It supports complex queries and real-time analytics, enabling thorough risk assessments and prompt detection of suspicious activities. Its high availability and automatic failover capabilities ensure continuous compliance with data retention and accessibility requirements. Bank large financial institutions and digital banks use Cloud Spanner for its throughput and endless scale.

Bigtable: Handles high-throughput, low-latency data processing, making it suitable for storing extensive transaction histories and customer behavior logs. Real-time monitoring and analysis of customer activities help identify patterns indicative of money laundering. Integration with Dataflow and BigQuery enhances its capabilities for advanced analytics and compliance reporting; many insurance companies use this combination to build AML/BSA systems.

3. Risk Assessment

AI Platform: Enables the development and deployment of machine learning models to assess customer risk profiles based on transaction history and behavior. These models can identify patterns indicative of money laundering or other illicit activities.

Cloud Pub/Sub: Facilitates real-time data streaming and event-driven architectures, allowing for continuous monitoring of transactions and timely detection of suspicious activities.

Dataflow: Enables real-time and batch data processing, essential for monitoring transactions and detecting suspicious activities as they occur. Creating data pipelines that process and analyze transaction data in real-time allows for quick identification and response to potential AML/BSA violations. Integration with machine learning models further enhances risk assessment and customer profiling.

4. Compliance and Reporting

Cloud Functions: Automates the generation and submission of compliance reports, such as Suspicious Activity Reports (SARs), to regulatory bodies. These functions can be triggered by specific events or schedules, ensuring timely and accurate reporting.

Cloud Logging: Maintains detailed logs of all transactions and interactions, providing a comprehensive audit trail for compliance purposes.

Dataform: Manages the ELT process, ensuring that customer data is accurately transformed and ready for compliance analysis. Automating data transformations and maintaining version control ensures that data used for AML/BSA compliance is consistent and reliable, critical for generating accurate compliance reports and maintaining audit trails.

5. Data Access and Retention

Cloud IAM: Implements role-based access controls (RBAC) to ensure that only authorized personnel can access sensitive data. This is crucial for maintaining the confidentiality and integrity of customer information.

Cloud Storage Lifecycle Management: Allows for the definition and enforcement of data retention policies, automatically deleting or archiving data based on predefined rules to comply with legal requirements.

Dataplex: Provides a unified interface for cataloging, managing, and governing data across data lakes and data warehouses. It ensures that customer data is properly classified, secured, and compliant with AML/BSA regulations. Automated data discovery, metadata management, and policy enforcement help maintain data quality and integrity, essential for accurate risk assessments and compliance reporting.

6. Vendor Management

Google Cloud Marketplace: Offers third-party risk management tools that can be used to conduct due diligence on cloud service providers. Evaluating their security measures, compliance certifications, and data handling practices ensures that your cloud providers meet the necessary regulatory standards.

Service Level Agreements (SLAs): Ensure SLAs with cloud providers include specific terms related to data security, compliance, and incident response to ensure accountability and reliability.

Contact Me

Google Cloud offers a comprehensive suite of solutions designed to help enterprise organizations maintain BSA/AML compliance. For more information on how Google Cloud can support your BSA/AML compliance needs, please contact me. [email protected]