“The bad guys are looking for the weakest link,” he said. “They start to go downstream and look at the smaller institutions.”

Cindy Williams, vice president of regulatory compliance for PolicyWorks, a Des Moines, Iowa-based compliance consulting firm, added, “Small credit unions used to feel safe. However, it has become well known over the last several years that small credit unions are specific targets for fraud and suspicious activity simply because their monitoring systems may be less sophisticated than larger financial institutions.”

And as the Panama Papers demonstrated, the bad guys want to hide their assets.

“I’ll be shocked if the regulators aren't looking at the Panama Papers,” Alex Henderson, co-founder and general manager of compliance services for Teraverde Management Advisors, said. Teraverde is a financial consulting firm located in Lancaster, Pa.

Members of Congress certainly are looking at the Panama Papers. Sens. Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio) recently sent a letter to Treasury Secretary Jack Lew asking whether any U.S. entities were involved with Mossack Fonseca & Co., the Panama-based law firm whose leaked records pointed to efforts to help clients create shell companies to launder money, hide assets and evade taxes.

In light of the recent terrorist attacks in Europe, the Panama Papers placed governments around the world on even higher alert for suspicious activities – including financial ones.

Credit unions were already in the firing line. Last year, The Wall Street Journal reported the Financial Crimes Enforcement Network was investigating 50 credit unions that might be particularly vulnerable to money laundering.

NCUA Chairman Debbie Matz later said FinCEN had agreed to share draft reports on credit unions with the NCUA to ensure their accuracy.

The Panama Papers scandal may energize FinCEN's efforts to issue final rules strengthening customer and member due diligence requirements, according to Henderson. Those rules would require financial institutions to verify the identities of beneficial owners of their customers and members. The proposed rules were issued in 2014.

“My prediction is that the impact of the Panama Papers will be to move that along faster,” Henderson said.

That will be a welcomed development, Pargac said.

“It needs to happen sooner rather than later,” he said. “Maybe the Panama Papers … is going to be what pushes it to the top.”

The length of time the proposed rules have been circulating without the adoption of a final rule is bothersome, Pargac said, adding that it could cause credit unions to change their compliance systems in the middle of the year.

“It creates uncertainty in the process that really isn't needed,” he said.

Henderson said he believes FinCEN also is examining the issue of personal liability for compliance officers.

“That's a tough nut to crack,” Pargac said. “A lot of the time compliance people are really trying to do their jobs.”

However, he cited the case of Thomas Haider, a former compliance officer for money transfer company MoneyGram, as evidence that federal officials will not shy away from the personal liability issue. MoneyGram reached a $100 million settlement with the federal government in 2012 after the company was accused of wire fraud and money laundering control violations.

The Treasury Department then fined Haider $1 million, and in January, a federal judge in Minnesota ruled compliance officers may be held accountable under money laundering statutes.

Pargac said the federal court ruling will lead to additional cases in which compliance officers will be held liable if they do not develop effective AML and BSA programs.

“We will see more of that in the future, but it will have to be egregious,” he said.

Still, those interested in money laundering and other financial crimes usually manage to stay one step ahead of the technology used to catch them, according to Williams.

“As is often the case in our industry, the ability to execute these types of transactions is growing faster than the systems needed to monitor them,” she said. “Credit unions will need to be continually exploring ways to stay on top of these transactions.”

Some methods used by money launderers and other financial criminals are quite simple, she said. Recently, fraudsters used publicly available information about credit union executives, including information from their social media accounts, to initiate transactions that appeared to be at their own request.

Williams said a couple of years ago, she attended a BSA conference at which one speaker said a few criminals were likely attending the meeting simply to learn what was being discussed.

“The fraudsters are always coming up with new methods to launder money,” Williams said. “And they stay on top of industry efforts to thwart those activities.”

More recently, FinCEN used Geographic Targeting Orders to require U.S. title insurance companies to identify the people behind all cash purchases of real estate in New York City and Florida's Dade County, FinCEN Director Jennifer Shaskey Calvery said in an April 12 speech.

Pargac said for a compliance program to be effective, it must be driven from the top.

“It has to start with the board of directors and the CEO,” he said, adding that credit unions must adopt anti-money laundering efforts as part of their business strategy.

“You have to weave it into the fabric of the institution,” he said.

Pargac added some credit unions underestimate the importance of an effective program.

“You don't understand how important it is until you’re caught,” he said.

However, Reaves added every staff member, including tellers, must be involved in spotting questionable transactions. He said his company has developed a product that scans checks for several risks.

“We boil it down to a red light-green light for the teller,” he said.

Pargac said Navigant offers a variety of programs that evaluate the effectiveness of a financial institution's compliance efforts. For instance, the company will examine a credit union's transactions over the past year to identify problems. Navigant can also conduct a gap analysis to identify holes in a credit union's compliance program.

The inevitable result of increased scrutiny is increased compliance costs, according to Marvin Umholtz, president/CEO of Umholtz Strategic Planning & Consulting Services in Olympia, Wash.

“It's really going to squeeze the smaller institutions,” Umholtz said, adding that regulators are moving from a risk-based regime to one that emphasizes compliance. He noted their attitude seems to be, “We’re going to treat you like we treat the big guys.”

“That's why a lot of the folks involved in the smaller credit unions are really sweating it,” he said.