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No-one likes to receive subpoenas from enforcement authorities, but communication with the agencies is key during these interactions, while a robust internal procedure for tracking agency requests can also help to detect trends and adjust compliance procedures, panelists at the Money Transmitter Regulators Association (MTRA) Annual Conference said.
Whether it receives a letter, a phone call, a subpoena or a visit from a U.S. law-enforcement agency, a payments firm should not be afraid of talking to officials and striking up relationships with them, Alex Ketter, vice president of Ria Financial, said at the U.S. Money Transmitter Regulators Association’s (MTRA’s) Annual Conference.
Enforcement agencies often get in touch with companies before visiting their premises and in most cases their visits are casual. Sometimes they merely want to get to know a company or know how certain products or services work.
The sharing of information can help businesses to build good relationships with enforcement agencies and to identify trends casually, he continued.
“I think it is great to build relationships between law enforcement and financial institutions. I think both sides can get a lot out of it...particularly if later there is some sort of investigation when the law enforcement needs something more concrete from the financial institution,” Lea Pfeifer, head of legal regulatory matters and compliance at MoneyGram, added.
There are cases when subpoenas are phrased in a way that makes it hard for firms to comply with them, but companies should talk to the regulators, show their intention to cooperate and find out what the law enforcement agencies want by way of information, Pfeifer said.
Although subpoenas — court orders for the production of information or documents — may sound alarming to many companies, they do not prove that the recipients are the targets of investigations, Ketter reminded the audience.
He also advised companies to implement robust internal procedures — perhaps using databases — for tracking subpoenas and making sure that their replies were fully compliant and consistent with each other.
Such a database could log the reasons for a request, which might involve a scam or money laundering, and identify the agency that sent the request, Pfeifer added.
It could help the company in question to see trends over time and perhaps adjust some of its procedures to make sure that they comply with regulations fully.
The tracking procedure, she thought, could also help to spot the moment when the team responsible for replying to subpoenas ought to contact an internal or external counsel.
