Regulator Expectations on your BSA Program

By: Jessica Caballero, CERP, CRCM
Be Prepared for Regulator Expectations

Top Things Regulators Want to See
In Your BSA Program

Running a successful BSA/AML program is not for the faint of heart. Between the endless amounts of information BSA professionals need to sift through to piece together regulatory expectations, industry trends, and emerging threats to increasing regulatory scrutiny, the requirements are complex and time consuming.

Do you ever wish someone could brief you on the highlights? Let you know the steps to take to help your program avoid regulatory penalties? Whether your process is manual or automated, examiners hold you to a certain standard. Compiled by a team of BSA experts and former regulators, here are 10 things regulators want to see in your BSA program:

Customization and calibration

Your program – whether automated or manual – must be tailored to your risk profile. This is a continuous effort. A calibration is not something you do once and forget about. Examiners will be most impressed when the parameters within your scenarios are risk-based, thoroughly documented, and reviewed periodically by a third party.

A system can return hundreds of alerts but examiners are not looking for volume, they are looking for quality. Too many false positives mean you are wasting time sifting through it all. Too few alerts may mean you are missing something. When your system is calibrated to the "sweet spot," you will maximize efficiency and increase confidence in your system.

Adaptability

What if we told you that the program you have in place today looks drastically different than the one you will have in five years? With innovation and modernization as the current industry focus, examiners want to see that your program is built to adapt to change. Whether it is regulatory change or changes in customer behavior, your BSA program should continue to effectively do its job – catch the bad guys!
The bad guys are always innovating, and the industry is catching up. Regulatory agencies have given the green light to innovation and pilot programs. Use this to your advantage, modernize your program, and get ahead of the criminals.

Contact your CSM to learn more about pilot program options.

Quality control.

Even if you have the most thorough and efficient parameters in place, they are only as good as the action you (do or don't) take on them. Recently, regulators have been focusing more attention than ever on quality control. Who is monitoring your program? Are they qualified to clear alerts? Especially if you're low on BSA experts and resources, this can be a challenge. Sometimes you simply can't do it all alone. If you do find yourself in this situation, there are options available for short-term or long-term relief.

Let's partner together

A holistic perspective.

A BSA Officer has more responsibilities than others may realize. Running reports, working alerts and closing cases is a large part of their job, but there's also more to it. When exam time comes around, a BSA Officer will need to speak to examiners about all areas of their program, including the technical element of their software, if applicable. An examiner may ask to see certain reports, scenarios, the way that data flows to and from the system and so on. For that reason, it is crucial that BSA Officers are able to speak confidently and knowledgeably about all areas of their BSA/AML monitoring.

Flexibility toward growth. 

More often than not, growth is a good thing. It means that an institution has naturally increased accounts or possibly experienced a merger/acquisition. But sometimes growth can come with new sets of challenges. When growth occurs, regulators will expect your program's scope to adjust. Just because you soared through a regulatory exam ten years ago doesn't mean you necessarily will today. You may have acquired new areas of risk and possibly an increased workload. These factors need to be accounted for in many areas of your BSA program including CDD, EDD and so on.

Ongoing CDD/EDD.

On the topic of CDD – BSA Officers know that it's crucial to "know your customer." However, today, it is not enough to simply have a CIP in place. Many institutions are doing CIP well, but regulators are diving deeper into actual vs. expected transactions, enhanced due diligence on high-risk customers, and more. As was mentioned earlier, beneficial ownership may throw a new curveball into your CDD/EDD processes.

Integration into other departments.

BSA Officers have to work with nearly every department at their institution. They're on a first name basis with the fraud investigators, head teller, branch managers, loan operators and more. Sometimes these roles even overlap. Because of that, there is a current trend toward pairing BSA/AML monitoring with other areas of the bank – specifically fraud. Regulators will be glad to see a thorough and robust program that looks for many types of suspicious activity. Plus, you'll be minimizing losses in the meantime.

Timely and accurate SARs and CTRs.

This is nothing we haven't heard before. The timely and accurate filing of SARs and CTRs is a fundamental area of BSA/AML compliance. Especially with the recent cases of personal liability, regulators are making it known that there is little room for error or negligence in filing them with FinCEN. There are plenty of resources from FinCEN and other regulatory agencies on how and when to file a SAR or CTR. If you still have questions, a consultant can also help guide you.

A strong culture of compliance.

Though it may sometimes feel like it, fighting financial crime through BSA/AML compliance is not a one-person show. A culture of compliance starts from the top down, including everyone from upper management to new employees on their first few days of training. Regardless of your institution's size, it is important to communicate the importance of BSA/AML monitoring into everybody, making it part of their daily activities. The most successful BSA/AML programs are the ones that get support from everybody – from the top down.

BSA Officers have one of the most critical roles at an institution. With that comes a lot of responsibility, and it can be a bit overwhelming. But remember, you don't have to do it all alone. At Abrigo, our goal is to help you be successful in your BSA/AML monitoring. We are sharing these industry insights to help you analyze your current system and feel more confident when exam time comes around.

Find out how Abrigo can help strengthen your BSA/AML program.
Learn More
About the Author

Jessica Caballero, CERP, CRCM

Jessica Caballero began her career as an examiner for the Office of the Comptroller of the Currency and worked as a BSA officer at a community financial institution as well as a compliance consultant with Compliance Alliance before joining Abrigo. She has examined banks for asset quality, consumer compliance, capital markets and information technology, has helped banks implement Dodd-Frank and has assisted banks and credit unions as they created risk assessment processes, policies, and comprehensive compliance management programs. As Abrigo’s Senior Manager of Strategy and Engagement, Jessica helps financial institutions accurately interpret risk management topics by providing industry training and thought-leadership whitepapers and articles. Jessica earned her bachelor’s degree in business economics from Texas State University.

Full Bio

About Abrigo

Abrigo is a leading technology provider of compliance, credit risk, and lending solutions that community financial institutions use to manage risk and drive growth. Our software automates key processes — from anti-money laundering to fraud detection to lending solutions — empowering our customers by addressing their Enterprise Risk Management needs.

Make Big Things Happen.

 

Looking for Banker’s Toolbox? You are in the Right Place!

Banker’s Toolbox is now Abrigo, giving you a single source for all your enterprise risk management needs. Use the login button here, or the link in the top navigation, to log in to Banker’s Toolbox Community Online.

Make yourself at home!