There is a lot of debate at my bank regarding what constitutes a “reasonable time frame” for completing an AML investigation. We are a duel regulated Bank (Federal Reserve and OCC) and even our two regulators seem to have differing opinions about the term “reasonable” as described in the available guidance. What does Dominion think?

Sometimes the issue often referred to as the “30 day clock” and the issue of “reasonable time frame” get confused.” They shouldn’t. The 30 day clock issue has been discussed within the AML community ad nauseam for several years, and FinCEN has issued very clear guidance on that issue. However, what is not so clear is what constitutes a reasonable amount of time from the point an alert is created to the point the ensuing investigation is completed, and in some instances a SAR is filed.

The following is an excerpt from page 67 of the FFIEC BSA/AML Examination Manual:

Whenever possible, an expeditious review of the transaction or the account is recommended and can be of significant assistance to law enforcement. In any event, the review should be completed in a reasonable period of time. What constitutes a "reasonable period of time" will vary according to the facts and circumstances of the particular matter being reviewed and the effectiveness of the SAR monitoring, reporting, and decision-making process of each bank. The key factor is that a bank has established adequate procedures for reviewing and assessing facts and circumstances identified as potentially suspicious, and that those procedures are documented and followed.

As you can see, the FFIEC Manual has placed the burden of determining what constitutes a reasonable period of time squarely upon the shoulders of the institution. Furthermore, the manual has provided examiners with significant leeway to form their own opinion as to whether a bank’s process is reasonable.

However, it is important to note that the FFIEC manual states that the period of time to complete an investigation will “vary.” This is perfectly logical. Some investigations are simple that take very little time and others are more complex and may involve networks of accounts and sophisticated money laundering schemes. Obviously, the latter would involve more time.

Dominion believes based on its experiences with numerous examiners, if an institution has clearly written procedures detailing the processes for detecting, investigating, and reporting suspicious activity and those procedures provide a general timeframe for matters to be completed, they have met the regulatory expectations as it relates top this topic. Of course it is important these procedures are followed by the AML staff. Whether institutions decide to be specific about the number of days considered “reasonable” or whether they decide to leave it vague, Dominion recommends the following:

All matters should be resolved within 90 days of an alert generating. However we believe that the vast majority of matters should be resolved with 60 days and only outliers extending up to 90 days. If a bank demonstrates a sustainable and repeatable suspicious activity detection, investigation, and SAR reporting process that falls within these time frames, we believe that is “reasonable.” In some cases institutions encounter very complex investigations that may go on for months. In these rare cases we see no reason why an institution could not file a SAR within 90 days and continue the investigation, gather more facts, and file a follow up SAR as needed.