BSA/AML compliance continues to be an examination priority for federal and state regulators. For several years, the NCUA has included BSA/AML in its annual list of examination priorities, and on June 21, the Federal Financial Institutions Examination Council (FFIEC) released updates to four sections of the Bank Secrecy Act/Anti-Money Laundering Examination Manual (Manual). The updated sections are as follows:
Second round of updates this year
The June updates follow revisions previously made to the Manual on February 25, covering the Introduction, Customer Identification Program, Currency Transaction Reporting, and Transactions of Exempt Persons. The updates in February were, perhaps, more important than the June updates as changes in the Customer (Member) Identification Program are of particular interest to compliance professionals, following the implementation of the long-awaited “beneficial ownership” regulations just a few years ago. Examiners are now focused on ensuring financial institutions are compliant with the changes (instead of just accepting that a financial institution’s BSA/AML program is in development).
Updates not considered “new” instructions
According to the news releases posted about each round of updates, these updates are not new instructions. Over the past few years, the FFIEC has endeavored to update a few sections at a time for clarification and for governance purposes. Their efforts have largely been applauded by compliance professionals.
Although many credit unions probably have limited products and services within these newly updated sections, it’s still a good reminder that Manual represents a key and critical resource for BSA/AML officers and compliance professionals. It is like having the answers to the test before the test is administered.
One section to note is Special Measures. Special Measures is a never-before used mechanism at a national level. Nonetheless, every credit union should have procedures drafted in the event of a Special Measures release. The new update can help you draft your procedures if you have not already and will provide a source to keep that procedure updated.
If you have not reviewed the Manual recently, make sure to take time to read and evaluate all the recent updates from this year and last year. Compare your procedures to the clarified expectations in the Manual, especially as you approach the time for your BSA/AML Program review performed by an independent reviewer and as you approach your regulatory exam. The Manual’s table of contents presents an easy tool for you to use to ensure you have the relevant topics covered with procedures and processes.
And, remember to document, document, document; but also follow your processes and procedures. Do not make it easy for an examiner to construct that finding claiming your financial institution has a procedure you do not follow.
VP, Senior Risk Manager
Now available on demand: BSA Basics
Specifically designed to help credit unions fulfill their 2021 yearly regulatory training requirements, this training hosted by ProBank’s Mark Dever covers the following topics: Currency Transaction Reporting (CTR), Office of Foreign Asset Control (OFAC), audit, Suspicious Activity Reporting (SAR), Member Due Diligence (MDD), risk assessment, “beneficial ownership,” and more.
Length: 3 hours