Is Your BSA Program in Shape?  

Introduction

As summertime approaches, many Americans go through the process of checking their fitness to determine whether or not they are ready for “prime time” on the beach.  For those who find themselves not quite ready- a fitness check and plan for “getting in shape” is the best approach.  We suggest to you that the same is true for your BSA/AML program.  Is your BSA program in “fighting shape” for the year?  Let’s do a quick review:

The BSA Risk Assessment

When was the last time that your compliance committee and the Board reviewed the risk assessment and approved it?  If the last approval was more than 12 months ago, it is time to do some checking!  It is not enough to simply assert that not much has changed, so the old policy can just be re-approved!  There are some questions you should ask; were there any changes in the Banks’ policies, procedures, staff, products offered, or the demographics of the surrounding community?  If the answer to any of these questions is yes, then changes to the BSA/AML assessment are required!  

The OFAC Risk Assessment   

All of the same questions that should be asked for the BSA Risk assessment should be asked for the OFAC risk assessment.  In addition to these questions, you should check on the lists of countries on the OFAC list.  Another area that has begun too catch the eye of regulators is the Bank’s policy on vendors.  Does your Bank run an OFAC check on all new vendors?  If not, your OFAC assessment is out of shape and needs a tune up!  

CIP/KYC

When was the last time that you reviewed the criteria that you use to risk rate accounts?  Do you include the NAICIS codes for businesses in your risk rating?  Have you validated that the rating weights that you are using  still have the right impact?  Industry risk ratings change and the Bank’s experience with clients can also impact the weight given a particular type of transaction or account relationship.  If the ratings have not changed in over a year, then it is time to review. 

High Risk Accounts  

Have you considered the idea that the high risk account list should be dynamic?  With the exception of MSB’s the customers who are on this list should be there due to some actual activity that the customer has conducted.  This activity should be monitored for a time and a determination should be made whether or not this activity is normal for the customer.  Once activity is determined to be normal, the customer should drop. 

SAR Filings

Is there a reason that SAR filings have either dipped or increased dramatically?  For that matter, do you have information on why SAR filings tend to be the same.  It could well be the case that that the some of the SAR repeat filings should be closed.  Have you checked the criteria being used to investigate and file SARS?  If not, now might be a good time for a quick SAR “workout”! 

CTR Exemptions

Are you making sure that this list is all that it can be?  Too often, we see Banks that file too many CTR’s than is necessary.  A review of frequent CTR fillers might reveal several customers who are eligible for exemption. 

 

Training

Is your training an afterthought?  Too often even though training is required under this regulation, it often gets put aside until the very end of the year.  Moreover, the effort expended on training tends to be minimal.  In our experience, the more the staff gets trained, the more active they become in the overall BSA/AML compliance effort.    

As we approach summer and get ready for the heat, it is a good idea to make sure your BSA program is in shape!