Compliance Blog

Categories: BSA

Would These Issues Crop Up with Your BSA Examination?

Written by Shari R. Pogach, Regulatory Paralegal, NAFCU

Exam Result Meme

One of the sessions during the 12thAnnual Mid-Atlantic Anti-Money Laundering (AML) Conference that I recently attended was on current compliance topics.  Panelists from the FDIC, OCC, FINRA, FinCEN and the Federal Reserve Board discussed some of the issues they had noted during financial institution examinations for Bank Secrecy Act (BSA)/anti-money laundering (AML) compliance.  Under the current landscape, as institutions merge, they obviously grow but also get more complex. An institution’s risks therefore increase and make internal controls even more important.  This increases the importance of independent testing performed by a qualified entity. 

The panelists indicated some financial institutions had been cited for lax review procedures.  These included:

  • Insufficient reviews of accounts;
  • Conclusions inadequately supported;
  • Inappropriate risk rating of accounts and customers;
  • Inadequate screening for OFAC;
  • Inadequate testing and monitoring systems;
  • Missing or ignoring risks;
  • Insufficient monitoring of suspicious activity; and
  • AML program not evolving with an institution’s business and/or risks.

The regulators also discussed what they consider makes for strong governance and oversight for BSA/AML compliance.  An institution should have:

  • A strong risk assessment;
  • Good board reporting (not just a data dump); and
  • Good policies/plans on what actions to take to ensure BSA/AML compliance.

Several of the banking agencies are reviewing the way they examine for BSA with a goal to more efficiency and effectiveness, burden reduction and clarity with risk-based management of BSA/AML compliance.  The panelists also indicated a zero tolerance policy when it comes to BSA/AML non-compliance.

Also of interest, FinCEN recognizes BSA is decades old and that it’s time for a review of the regulations.  Its end goal is to support law enforcement investigations, protect the U.S. financial system and gain insight into illicit schemes. Any comments on current regulations should state not just how a change would ease regulatory burden but also how it would continue to protect the system.  Credit unions with any such comments can forward them to NAFCU’s Regulatory Affairs division, care of Ann Kossachev at akosschev@nafcu.org.

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About the Author

Shari Pogach, NCCO, NCBSO, Regulatory Paralegal, NAFCU

 Shari Pogach, NCCO, NCBSO, Regulatory Paralegal

Shari R. Pogach, NCCONCBSO, has served as Regulatory Paralegal for NAFCU's Regulatory Compliance and Regulatory Affairs divisions since 2007.

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