According to the FFIEC BSA/AML Examination Manual (the “Manual”), identifying geographic locations that may pose a higher risk is essential to a financial institution’s BSA/AML compliance program. U.S. financial institutions should understand and evaluate the specific risks associated with doing business in, opening accounts for consumers from, or facilitating transactions involving certain geographic locations. When considering BSA risks, focus on the geographic locations unique to your financial institution, and in particular, high intensity drug trafficking areas (HIDTAs). Many financial institutions have their main headquarters or branch locations in small towns or rural areas and perhaps not in an area where HIDTAs are top of mind, but many are located in or adjacent to counties designated as HIDTAs.
According to the Drug Enforcement Administration (DEA), the purpose of the HIDTA program is to reduce drug trafficking and production in the United States by:
- Facilitating cooperation among federal, state, local, and tribal law enforcement agencies to share information and implement coordinated enforcement activities.
- Enhancing law enforcement intelligence sharing among federal, state, local, and tribal law enforcement agencies.
- Providing reliable law enforcement intelligence to law enforcement agencies to facilitate the design of effective enforcement strategies and operations.
- Supporting coordinated law enforcement strategies that make the most of available resources to reduce the supply of illegal drugs in designated areas of the United States and in the Nation as a whole.
The United States is experiencing its worst-ever drug crisis. Communities across the country have seen a dramatic spike in opioid and heroin addiction. In May 2018, the areas surrounding Anchorage, Fairbanks, and Juneau were designated as the newest regional HIDTA program. With the addition of the regional HIDTA in Alaska, there are now HIDTA-designated counties in all 50 U.S. states, as well as Puerto Rico, the U.S. Virgin Islands, and the District of Columbia. According to the DEA, nearly two-thirds of the U.S. population are located in HIDTA-designated counties. These sobering statistics are yet another illustration of how the drug epidemic is a nationwide problem, impacting rural areas and large cities alike, and they serve as a reminder that the likelihood of your financial institution being in or adjacent to a HIDTA-designated county continues to grow.
Although proximity to a HIDTA does not necessarily determine a consumer’s or transaction’s risk level, either positively or negatively, this issue should be considered in your financial institution’s risk assessment. As outlined in the Manual, the following metrics should be addressed in your risk assessment:
- The volume of branches and ATMs that are in or adjacent to a HIDTA
- The proximity of the financial institutions branches to the Interstate system
- The volume of account relationships located in a HIDTA
- The volume of domestic funds transfers that involve HIDTAs
- The number of money services business (MSB) customers/members and whether they are located in a HIDTA
The HIDTA program provides assistance to federal, state, local, and tribal law enforcement agencies operating in areas determined to be critical drug-trafficking regions of the United States. Make sure your financial institution does its part in combatting this crisis by quantifying HIDTA-related metrics in your BSA/AML risk assessment and implementing appropriate risk-based due diligence procedures.
For more information on the location of HIDTAs, go to: http://www.nhac.org/news/HIDTA_Counties.htm