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Best practices for your credit union’s BSA/AML risk assessments: Part 2

By: Jennifer Morrison, VP, Senior Risk Manager

This is the second article of a three-part series on the importance of the BSA/AML risk assessment with topical information, best practices, and suggestions for completing it. If you missed part one, you can view it here.

Last month’s article focused on the basics of your BSA/AML risk assessment in a three-step process. In step two, evaluating data pertaining to the credit union’s activities, I suggested how you might aggregate data corresponding to the various products and services, member types, and geographies your credit union serves in an effort to determine the relative BSA/AML risks associated with each category. Last month, I noted that I would be expanding on inherent versus residual risks in this next part.

This month’s article (part two) is focused on how risks are defined as inherent risks and residual risks, as well as controls, and the perils of assigning risks to the categories of low, medium or moderate, and high. Contents of this month’s article include the following topics:

  • Defining inherent risk
  • Defining residual risk
  • Reviewing the role of internal audit
  • Assigning risks to the categories of “low,” “medium” or “moderate,” and “high”
  • Utilizing the CSBS Self-Assessment Tool