Top 10 Things a New BSA Officer Must Know
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Transcript of Top 10 Things a New BSA Officer Must Know
Top 10 Things a New BSA Officer Must Know
What is Associated Risk Group?
Premier provider of BSA/AML regulatory best practices to financial
institutions including Risk Assessments and Training.
Speaker• Lyn Hall-Fore
– Vice President, Regulatory Compliance Consultant with Associated Risk Group
– Vice President, Corporate Compliance Officer with $750 million financial institution
– Paralegal, part of legal team defending financial institutions on fraud, embezzlement and breach of internal control issues
Top 10 Things a New BSA Officer Must Know
Agenda1. FinCEN2. FFIEC BSA/AML
Examination Manual3. Four Pillar of a
BSA/AML Compliance Program
4. Risk Ranking5. CIP vs. CDD and
EDD
6. Currency Transaction Reports
7. Structuring8. Suspicious Activity
Reports9. Monetary Instrument
Log10.Funds Transfers
1. FinCEN• The U.S. Department of the Treasury
established the Financial Crimes Enforcement Network in 1990 to provide a government-wide multi-source financial intelligence and analysis network.
• The organization's operation was broadened in 1994 to include regulatory responsibilities for administering the Bank Secrecy Act, one of the nation's most potent weapons for preventing corruption of the U.S. financial system.
FinCEN• FinCEN’s mission is to enhance U.S.
national security, deter and detect criminal activity, and safeguard financial systems from abuse by promoting transparency in the U.S. and international financial systems.
• http://www.fincen.gov/
FinCEN• Statutes and Regulations• Bank Secrecy Act Forms and Filing
Requirements• Reports and Publications
– SAR Activity Review, Trends, Tips and Issues– SAR Activity Review - By the Numbers– Suspicious Activity Reporting Guidance
2. FFIEC BSA/AML Examination Manual
• Federal Financial Institutions Examination Council– Board of Governors of the Federal Reserve– Federal Deposit Insurance Corporation– National Credit Union Administration– Office of the Comptroller of the Currency– Office of Thrift Supervision– State Liaison Committee
FFIEC BSA/AML Exam Manual• Most recent edition was published in
August 2007• Manual provides guidance to examiners
and used by BSA Officers to evaluate and design BSA/AML Compliance Programs
• Answers many questions regarding BSA/AML issues
FFIEC BSA/AML Exam Manual• Structure of Manual
– Introduction– Core Examination Overview and Procedures for Assessing the
BSA/AML Compliance Program– Core Examination Overview and Procedures for Regulatory
Requirements and Related Topics– Expanded Examination Overview and Procedures for an
Enterprise-wide Compliance Program and Other Structures– Expanded Examination Overview and Procedures for Products
and Services– Expanded Examination Overview and Procedures for Persons
and Entities– Appendices
FFIEC BSA/AML Exam Manual• Electronic Version
– http://www.ffiec.gov/bsa_aml_infobase/default.htm
• Print Format Version– http://www.ffiec.gov/bsa_aml_infobase/docu
ments/BSA_AML_Man_2007.pdf
3. Four Pillars of a BSA/AML Program
1. System of Internal Controls2. Independent Testing3. BSA Compliance Officer4. Training
• Tip: Read your bank’s BSA/AML Policies and Procedures
Internal Controls• Bank’s policies, procedures, and process
designed to limit and control risks and to achieve compliance with the BSA
• Level of sophistication of the internal controls should be commensurate with the size, structure, risks, and complexity of the bank
• FFIEC BSA/AML Exam Manual page 29
Independent Testing• Independent testing or audit should be
conducted by the internal audit department, outside auditors, or other qualified independent parties.
• Generally performed every 12 to 18 months
• Evaluate BSA/AML compliance program and management information systems
• FFIEC BSA/AML Exam Manual page 30
BSA Compliance Officer• Board of directors designate a qualified
individual• BSA compliance officer is responsible for:
– Coordinating and monitoring day-to-day BSA/AML compliance
– Manage adherence to the BSA• Must have appropriate level of authority
and resources to administer BSA/AML Program
• FFIEC BSA/AML Exam Manual page 32
Training• Appropriate personnel should be trained
in applicable aspects of the BSA• Training should be documented and
include:– Regulatory Requirements– Bank’s BSA/AML policies, procedures and
processes• Should be given annually and to new
employees during orientation• FFIEC Exam Manual page 33
4. Risk Ranking• BSA/AML Risk Assessment provides a
risk ranking of highest risks to the bank for money laundering
• Products and Services• Customers and Entities• Geographic Locations
• Read your bank’s BSA/AML Risk Assessment
5. Customer Identification Program
• The CIP is required by US PATRIOT Act• CIP is intended to enable the bank to form
a reasonable belief that it knows the true identity of a customer
• Account opening procedures should specify the identifying information that will be obtained from each customer
FFIEC BSA/AML Exam Manual page 47
Customer Identification Program
• Minimum information needed:– Name– Date of birth– Address– Identification number (usually taxpayer
identification number)
Customer Due Diligence• Enables bank to predict with relative
certainty the types of transactions in which a customer is likely to engage
• Helps determine the expected profile and risk ranking of a customer
• Forms the basis to determine if transaction activity is normal or suspicious
Enhanced Due Diligence• Additional information for customers that
pose high money laundering risks to the bank
• Examples of enhanced due diligence questions can be found on page 58 of the FFIEC BSA/AML Exam Manual
6. Currency Transaction Report
• Must file Currency Transaction Report (CTR) for each transaction in currency of more than $10,000 by, through, or to the bank within 15 days if filed manually or 25 days if filed electronically.
• FinCEN Form 104 must be kept for 5 years
• http://www.fincen.gov/forms/files/fin104_ctr.pdf
7. Structuring• Conducts or attempts to conduct one or
more transactions in currency in any amount, at one or more financial institutions, on one or more days, in any manner, for the purpose of evading CTR filing requirements
• One of the most common issues facing a BSA Officer is structuring attempts
8. Suspicious Activity Report• Suspicious Activity Reports (SARs) are the
cornerstone of the BSA reporting system• Quality of SAR data is very important• Many examples of good SAR narratives
provided on FinCEN website• SAR Form -
http://www.fincen.gov/forms/files/f9022-47_sar-di.pdf
Suspicious Activity Reporting• When to file a SAR
– Criminal violations involving insider abuse in any amount
– Criminal violations aggregating $5,000 when suspect can be identified
– Criminal violations aggregating $25,000 or more regardless of a potential suspect
FFIEC BSA/AML Exam Manual page 60
Suspicious Activity Reporting• Timing of a SAR Filing
– 30 calendar days from the date of the initial detection of facts that may constitute a basis for filing a SAR
– 60 days if no suspect can be identified– Every 90 days for continued suspicious
activity
9. Monetary Instrument Log• Monetary instruments include:
– Bank checks or drafts• Foreign drafts
– Money orders– Cashier’s check – Traveler’s checks
• Purchased in exchange for currency
Monetary Instrument Log• Banks are required to verify the identity of
persons purchasing monetary instruments for current in amounts between $3,000 and $10,000, inclusive, and to maintain records of all such sales
• Does your bank permits sales to non-customers?
FFIEC BSA/AML Exam Manual page 95
10. Funds Transfers• Each bank involved in funds transfers
must collect and retain certain information for transfers of $3,000 or more.
• Requirement is commonly referred to as the “Travel Rule” (the information that must travel with the funds transfers)
• Specific information needed is found at FFIEC BSA/AML Exam Manual pages 100-103
Conclusion1. FinCEN2. FFIEC BSA/AML
Examination Manual3. Four Pillar of a
BSA/AML Compliance Program
4. Risk Ranking5. CIP vs. CDD and
EDD
6. Currency Transaction Reports
7. Structuring8. Suspicious Activity
Reports9. Monetary Instrument
Log10.Funds Transfers
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BSA Officer Must Know(Best Practices)
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