BSA/AML Risk Assessment – The bank’s BSA/AML risk assessment processes should include:
- The identification of specific risk categories (e.g., products, services, customers, and geographic locations) unique to the bank.
- Analysis of the information identified to better assess risk within these categories.
Further, the Manual provides instructions to examiners that there is no particular method or format a bank must use for the risk assessment and that risk categories can vary based on a bank’s size, complexity, or organizational structure. There is also no requirement for risk assessment updates on a continuous or specified periodic basis, but these updates may occur as necessary to align the risk assessment with a significant change in a bank’s risk profile.
Risk-Focused BSA/AML Supervision – Examiners should tailor BSA/AML examinations to a bank’s risk profile, including the examination and testing procedures, and conducting risk-focused testing. The Manual notes that examiners should utilize BSA Reporting that is readily available from FinCEN, independent testing, and audits.
Assessing the BSA/AML Compliance Program – Examiners should assess the adequacy of a bank’s BSA/AML compliance program, by setting a minimum set of procedures that will be utilized for the full scope BSA/AML examinations. This section separates internal controls, independent testing, BSA compliance officer, and training to provide in-depth instructions for the examiner.
Developing Conclusions and Finalizing the Exam – The Manual reminds examiners that they should primarily focus on whether the bank has established appropriate processes to manage ML/TF and other illicit financial activity risks, and that the bank has complied with BSA requirements.
It is important that banks and compliance teams periodically assess the quality of their BSA/AML programs. This is most important when the bank’s risk categories (products, services, customers, and geographic locations) change. High level of due diligence from financial institutions will help protect against ML/TF and other illicit financial activities.
You should work with your Sia Partners representative to review your BSA/AML compliance program(s) to ensure appropriate sufficiency with the new amendments.
Director AML, US Sanctions and FATCA