On July 22, 2019, the Financial Crimes Enforcement Network (FinCEN) issued a joint statement in a continuing effort to improve transparency with their risk-focused approach to Bank Secrecy Act (BSA)/anti-money laundering (AML) supervision. The risk-focused approach enables the Agencies to better tailor examination plans and procedures based on the unique risk profile of each bank.
The statement doesn’t really tell us anything new and does not establish any new requirements. However, it does outline some common practices when assessing a bank’s money laundering/terrorist financing risk profile, which assists examiners in scoping and planning an examination as well as the initial evaluation as to the adequacy of the BSA/AML compliance program. This approach allows examiners to allocate more resources to higher-risk areas and fewer resources to lower-risk areas when conducting BSA/AML examinations.
The emphasis in the statement appears to be in the following three areas:
- The bank’s BSA/AML Risk Assessment
Examiners evaluate the adequacy of a bank’s BSA/AML compliance program relative to its risk profile and its compliance with applicable laws and regulations. A well-developed risk assessment is a critical part of sound risk management and assists examiners in understanding the bank’s risk profile.
- Independent Testing
Examiners will review the bank’s Independent Testing. An Independent Test that properly considers and tests all risk areas (including products, services, customers and the geographic locations in which the bank operates and conducts business) is used in determining the examination procedures and transaction testing that should be performed.
- NOT De-Risking
The statement also encourages banks to manage customer relationships and mitigate risks by implementing controls commensurate with those risks, rather than declining to provide banking services to entire categories of customers (i.e. Money Service Businesses). Banks determine their own appetite for risk and as long as they operate in compliance with applicable laws, properly manage customer relationships, and effectively mitigate risks, they will neither be prohibited nor discouraged from providing banking services.
While we can’t determine your bank’s risk appetite, we can help you with your risk assessment and your independent testing. Don’t lose focus and let these areas fall by the wayside. Just because you didn’t have issues in the past doesn’t necessarily mean everything will be fine at your next exam. Contact us about our review services and see how we can help.
Jerod is the leader of Banker’s Compliance Consulting’s training productions. He is a nationally recognized speaker. Whether it’s a conference, seminar, school, webinar, or luncheon, it’s easy to stay engaged when he presents due to the amount of passion and energy he brings to each and every compliance topic. Jerod has spoken on behalf of the American Bankers’ Association, BankersOnline, many state banking associations, private compliance groups, and financial institutions. He is a Certified Regulatory Compliance Manager (CRCM) and BankersOnline Guru.
Jerod likes to spend his time (between reading regulations and producing compliance training!) relaxing at the lake with his wife and three children, following their activities or engaged in something sports related!