On June 21st, the Federal Financial Institutions Examination Council (FFIEC) once again updated the Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual. As you may recall, there were also recent updates in February 2021 and April 2020.
The exam manual provides instructions to examiners who are assessing the adequacy of an institution’s BSA/AML compliance program. Regardless of who your primary regulator is, it is good to be aware of the changes. This most recent update addressed the following topics:
- International Transportation of Currency or Monetary Instrument Reporting
- Purchase and Sale of Monetary Instruments Recordkeeping
- Reports of Foreign Financial Accounts
- Special Measures
The FFIEC makes it clear that the updates do not reflect any new requirements or an increased focus in these areas. The updates are simply intended to offer clarity and transparency and to support the risk-focused examination process.
Although there aren’t any earth-shattering changes, the updates direct examiners to evaluate and determine whether internal controls appropriately mitigate and manage money laundering, terrorist financing (ML/TF) and other illicit financial activity risks. Here’s a quick rundown of the updates:
This section clarifies how examiners should assess compliance with the rules regarding the international transportation of currency [see 31 CFR 1010.306(b) and 31 CFR 1010.340]. These rules are triggered when anyone physically transports, mails, or ships currency or other monetary instruments totaling over $10,000 into or out of the United States. Doing so requires the filing of a Report of International Transportation of Currency or Monetary Instruments (CMIR). The section outlines when such reports are necessary; who is responsible; and how policies and procedures should be evaluated. This section would be of particular interest to institutions that encounter this type of international bulk shipping activity.
Most institutions sell a variety of monetary instruments and have clear policies and procedures to monitor such activity and meet recordkeeping requirements. While there is nothing new in the exam manual from a procedural perspective, this update continues the trend of directing examiners to determine whether internal controls are properly designed to mitigate and manage ML/TF and other illicit financial activity risks.
This section only applies to those institutions required to file a Report of Foreign Bank and Financial Accounts (FBAR) under 31 CFR 1010.306(c). Institutions with a financial interest in or authority over one or more accounts in a foreign country, with an aggregate maximum value over $10,000 at any point during a year, must file this report. If these rules apply to your institution, it would be worth looking at the updates to be ready for any review and testing of your process(es).
This section discusses how examiners will assess compliance with special measures under the USA PATRIOT Act. The Secretary of the Treasury is authorized to require certain measures against foreign jurisdictions, foreign financial institutions, classes of international transactions, or types of accounts that are of primary money laundering concern. While there are a variety of potential actions, these special measures are implemented through regulatory orders from the Treasury. An updated list is available here.
Examiners are to determine which special measures may apply and evaluate the procedures in place. Transaction testing may occur to determine whether the necessary information is being collected and reported, and whether the bank has complied with any prohibitions or other required actions.
Kevin brings years of experience and a unique perspective on regulatory matters to our clients. A self-proclaimed geek and accredited CRCM, Kevin is also a recovering attorney with experience as in-house counsel for a large regional bank and one of the leading national title insurance providers. For reasons unknown, Kevin decided to leave the safety and serenity of his desk job to seek fortune and glory as a wandering adventurer. Like a bank compliance version of Kwai Chang Caine, The Man with No Name or Don Quixote, he now travels the land seeking to help those in need and righting compliance wrongs, wherever he may find them.
Kevin lives in Sioux Falls with his two children, who are surprisingly normal after having endured their father’s vivid imagination for their entire lives. He won’t admit to having any hobbies, because apparently “Regulations never sleep.” (While he does say this in his Batman voice, we’re pretty sure he’s joking.) From the looks of his Facebook page, he likes the outdoors and spending time with his large extended family (who seem like relatively normal people).