The basic components of a BSA/AML compliance program include: 1. Risk Assessment 2. Internal Controls Review 3. Independent Testing (Audit) 4.
Full Answer
Is annual BSA training required?
by Ken Golliherr: The "annual training requirement" under BSA is mythological. The only thing examiners could cite you to that could possibly mandate annual BSA training is your BSA policy. by John Burnett: If your policy says you will do annual BSA/AM:L training, it's a swamp of your own making.
What is AML BSA?
What is BSA in AML? In 1970, Congress passed the Bank Secrecy Act (BSA)—also known as the Anti-Money Laundering (AML) law. Since then, financial institutions like yours have been required to cooperate with government agencies to detect and prevent money laundering.
What is BSA compliance?
What is a BSA Compliance Officer?
- Pinpointing Anomalies. The BSA Compliance Officer’s responsibilities center around AML (anti-money laundering) efforts.
- Other BSA Compliance Officer Duties. In addition to detecting suspicious activity patterns, BSA Compliance Officers implement and manage the bank’s AML programs.
- Leveraging Technology. ...
- BSA Compliance Officer Resources. ...
Is your BSA and AML program at risk?
The OCC (Office of the Comptroller of the Currency) announced that BSA compliance is another key risk in 2019. Specifically, the OCC said it will focus on “determining whether AML compliance programs keep pace with changing risk environments and regulatory developments.”
What does a BSA AML program require?
BSA/AML regulations require financial institutions to: Keep records of cash purchases of negotiable instruments. File reports of cash transactions above $10,000. Report suspicious activity that might signify money laundering, tax evasion or other criminal activities.
What are the four key elements of an AML program?
The written BSA/AML compliance program must include the following four pillars:Internal controls;The designation of a BSA/AML officer;A BSA/AML training program; and.Independent testing to test programs.
How many main elements does an AML compliance program have?
There are five required elements of a compliance program – virtually identical to those listed above for FinCEN and FINRA.
What are the BSA requirements?
Specifically, the act requires financial institutions to keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000 (daily aggregate amount), and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities.
What are the 5 pillars of a BSA program?
The Five (5) Pillars of BSA/AML/OFAC CompliancePILLAR #1. DESIGNATION OF A COMPLIANCE OFFICER. ... PILLAR #2. DEVELOPMENT OF INTERNAL POLICIES, PROCEDURES AND CONTROLS. ... PILLAR #3. ONGOING, RELEVANT TRAINING OF EMPLOYEES. ... PILLAR #4. INDEPENDENT TESTING AND REVIEW. ... PILLAR #5. CUSTOMER DUE DILIGENCE. ... RECOMMENDED TRAINING.
What is BSA and AML?
BSA is the common name for a series of laws and regulations enacted in the United States to combat money laundering and the financing of terrorism.
Which action is part of the four basic components of Bank Secrecy Act BSA compliance?
There are four pillars to an effective BSA/AML program: 1) development of internal policies, procedures, and related controls, 2) designation of a compliance officer, 3) a thorough and ongoing training program, and 4) independent review for compliance.
What is AML compliance program?
An anti-money laundering (AML) compliance program helps businesses, including traditional financial institutions—as well as those entities identified in government regulations, such as money-service businesses and insurance companies—uncover suspicious activity associated with criminal acts, including money laundering ...
What are the 3 main factors to consider in determining AML risk?
Key Categories of BSA/AML Risk for Community Banks. Inherent BSA/AML risk falls into three main categories: (1) products and services, (2) customers and entities, and (3) geographic location.
What is an AML program?
An anti-money laundering (AML) compliance program helps businesses, including traditional financial institutions—as well as those entities identified in government regulations, such as money-service businesses and insurance companies—uncover suspicious activity associated with criminal acts, including money laundering ...
What is BSA enforcement?
Simply put, BSA enforcement can include a review of the training protocols. Training indicates the seriousness of the organization’s program, and identifies whether its risk assessment and risk profile have been adequately translated into operations.
Why is training important in anti-money laundering?
The ultimate point of training is not simply to establish compliance. It is to establish an effective anti-money laundering program. Failure to do this might be revealed in enforcement actions that can involve high fines.
What is the culture of compliance?
As part of a “culture of compliance,” top managers have to be fully informed about the policy issues involved in BSA regulations and authorize the resources needed to comply. They should periodically monitor and evaluate the compliance program based on a risk adjusted evaluation (audit) as well as reports on internal controls. Ultimately, the organizational risk due to money laundering needs to be fully understood at this level, both with respect to the consequences of the crime as well as of non-compliance.
Is BSA/AML compliance on autopilot?
Like every other important function in a financial entity, a BSA/AML compliance program cannot be expected to operate on autopilot. Managers and employees have to be aware of their responsibilities in the compliance program, and contribute actively as needed. Appropriate training is necessary to transform a compliance program design into an effective on-going operation.
Do employees need to understand the Bank Secrecy Act?
Not every employee needs to understand every aspect of the organization’s compliance program. But they do need to be aware of and act on responsibilities that fulfill the requirements of the Bank Secrecy Act (BSA) as it applies to their functional role. These roles might include setting up the overall compliance program, designing or implementing systems that can flag reportable transactions, monitoring systems for suspicious activity, conducting due diligence on customers, reporting transactions as needed, or auditing performance, among other functions. Again, training should be reviewed and updated, including if the employee’s functions change.
What is the assessment of the adequacy of the bank's BSA/AML compliance program?
The assessment of the adequacy of the bank’s BSA/AML compliance program is bank-specific, and examiners should consider all pertinent information. A review of the bank’s written policies, procedures, and processes is a first step in determining the overall adequacy of the BSA/AML compliance program. The completion of examination and testing procedures is necessary to support overall conclusions regarding the BSA/AML compliance program. BSA/AML examination findings should be discussed with relevant bank management, and findings must be included in the report of examination (ROE) or supervisory correspondence.
What is a BSA compliance officer?
Designation of an individual or individuals responsible for coordinating and monitoring day-to-day compliance (BSA compliance officer ).
What should an examiner document and support?
Examiners should document and support any changes to the examination plan, if necessary, then proceed to the applicable examination and testing procedures in Assessing Compliance with BSA Regulatory Requirements, Risks Associated with Money Laundering and Terrorist Financing, and Office of Foreign Assets Control.
Is a written policy sufficient for BSA?
Written policies, procedures, and processes alone are not sufficient to have an adequate BSA/AML compliance program; practices that correspond with the bank’s written policies, procedures, and processes are needed for implementation.
What is a BSA compliance program?
BSA Record Keeping and Suspicious Activity Report controls: A compliance program is required to designate a BSA officer, who should be separate from the overall CCO (depending on size of bank). Financial institutions have to maintain comprehensive records, especially concerning suspicious transactions, the assessment of such transactions, and the decision whether to file a SAR.
What is the Board and CEO commitment to AML?
The Board and CEO commitment, means more than just lip service; it means real hands-on dedication, communication and the personal touch to ensure that every business person views compliance as part of their duties and not just the compliance department.
Why is risk assessment important in AML?
Looking at geography, business and individual relationships, and numerous product lines, the risk assessment can help to organize risks, focus on measurement and look at remediation. The exact design and tailoring of the compliance program should be laid on a foundation created by the risk assessment.
How many pillars are there in AML?
We all know about the four pillars of AML compliance. Excuse me for ignoring them and moving on to a broader, and hopefully more helpful look at AML compliance elements. Instead of using pillars (with lots of surrounding air), I prefer to look at ten key functions that every AML compliance program for a financial institution should have.
Is compliance good or bad?
A compliance program is only as good as the communications that occur within the organization. Information that stays with one person and is not shared is deadly to the operation of an effective AML program.
What is the BSA/AML program?
Most financial institutions, from banks to MSBs to mortgage companies, must comply with Bank Secrecy Act/Anti-Money Laundering (BSA/AML) regulations. Each financial institution must develop and implement a written anti-money laundering program that is reasonably designed to prevent the institution from being used to facilitate money laundering or the financing of terrorist activities. This BSA/AML program must be approved by the Board of Directors or senior management.
What are the four pillars of BSA/AML?
The written BSA/AML compliance program must include the following four pillars: Independent testing to test programs. To build a stable home, you need a strong foundation. Likewise, an effective BSA/AML program also needs a strong foundation in order to support these four pillars.
What is a well developed risk assessment?
With a well-developed risk assessment, you can focus appropriate risk management processes on your institution's unique BSA/AML compliance program to effectively mitigate risk to the institution.
What is the role of compliance team in BSA?
The compliance team and/or audit department will need to conduct testing of the program to gauge how well the program is working, and make changes and updates as needed. BSA/AML programs should not remain stagnant; they need to grow and evolve with the business.
What is the purpose of a solid program?
As mentioned above, once the risk are identified and understood, the institution should build a solid program to control for those risks. The program needs to include policies, procedures and processes which are trained upon and incorporated into daily operations.
How can you develop a strong foundation?
How can you develop a strong foundation? Through a clear and comprehensive understanding of your organization's structure and risk exposure.
Who enforces BSA AML compliance?
To assist with BSA AML compliance and to hold financial institutions accountable, the United States Treasury Department established the Financial Crimes Enforcement Network (FinCEN) in 1990. FinCEN’s mission to “safeguard the financial system from the abuses of financial crime, including terrorist financing, money laundering and other illicit activity” allows it to implement, administer, and enforce BSA AML compliance.
How many pillars are there in BSA AML?
To ensure BSA AML compliance, financial institutions must follow the BSA AML pillars. Initially, there were four pillars of compliance. In 2018, following the CDD Rule, a fifth pillar was added. The pillars of BSA AML compliance are:
What is the job of a designated compliance officer?
It is also the designated compliance officer’s job to establish a BSA AML training program and to train all institutional staff. Not all employees need to be experts on BSA AML compliance, but all employees should be able to identify potentially suspicious activity and understand how to properly report it if necessary.
What is Fincen's mission?
FinCEN’s mission to “safeguard the financial system from the abuses of financial crime, including terrorist financing, money laundering and other illicit activity ” allows it to implement, administer, and enforce BSA AML compliance. FInCEN works to ensure banks adhere to the three main AML requirements of the BSA:
Do all employees need to be experts on BSA AML?
Not all employees need to be experts on BSA AML compliance, but all employees should be able to identify potentially suspicious activity and understand how to properly report it if necessary. All financial institutions should independently test their BSA AML compliance policy annually with the help of a third party.
The Board of Directors and Senior Management Have to Maintain Oversight.
The Organization Should Designate A BSA/AML Compliance Officer.
- The Board and top management may not be directly responsible for knowing the details of compliance, but the Compliance Officer should be. This position needs to be trained to understand the BSA in detail, understand what compliance means for his or her organization, take a lead role in developing a concrete compliance program, and be responsible fo...
Affected Employees Should Be Trained as Needed.
- Not every employee needs to understand every aspect of the organization’s compliance program. But they do need to be aware of and act on responsibilities that fulfill the requirements of the Bank Secrecy Act (BSA) as it applies to their functional role. These roles might include setting up the overall compliance program, designing or implementing systems that can flag reportable tra…
Training Should Include Real World Examples.
- Since every covered financial business will be exposed to different kinds of risks, it helps intensify training to run “table top exercises” or simulations in what the risks may look like and how to react to them. Trainees will benefit from experiencing these hypothetical events, making it much more likely they will respond appropriately when confronted by suspicious activity in the real world.
Training Documentation Is Part of The Compliance Program.
- Simply put, BSA enforcement can include a review of the training protocols. Training indicates the seriousness of the organization’s program, and identifies whether its risk assessment and risk profile have been adequately translated into operations. The ultimate point of training is not simply to establish compliance. It is to establish an effective anti-money laundering program. Fa…
Pillar #1 Designation of A Compliance Officer
- The Compliance Officer is responsible for knowing and understanding the policies and procedures outlined in the BSA/AML/OFAC compliance program, relating to the money services business (MSB). It is important to make sure you designate someone capable of learning and understanding the policies and procedures written for your organization, as well as has the capa…
Pillar #2 Development of Internal Policies, Procedures and Controls
- The development of internal policies, procedures and controls is the core of all the pillars. The second pillar addresses: 1. How you run the business 2. How your business stays in compliance 3. How you ensure that all the written policies and procedures are being implemented and upheld This pillar probably has the most variance amongst all the pillars because not all businesses op…
Pillar #3 Ongoing, Relevant Training of Employees
- All employees must receive ongoing, relevant trainingas it pertains to the AML compliance program. It is recommended that MSBs train all employees upon initial employment as well as once per year thereafter. Training must cover the basics of BSA/AML compliance and must be documented.
Pillar #4 Independent Testing and Review
- To be independent means that the person conducting the review cannot be the Compliance Officer or be someone that directly reports to the Compliance Officer. One of the main purposes of independent testing and reviewing is to identify any deficiencies in a business’s process. When deficiencies are found, recommendations can be made to alleviate any weaknesses in the BSA/…
Pillar #5 Customer Due Diligence
- The Customer Due Diligence (CDD) Rule, which amends the original BSA rule, is intended to improve financial transparency and prevent criminal/terrorists from using financial institutions to disguise their illicit activities. The CDD Rule has four main requirements. It requires financial institutions to establish and maintain written policies and procedures that are designed to: 1. Ide…