Regulatory examinations are stressful for financial institutions; that is a fact. Bank Secrecy Act (BSA) exams can be especially difficult, as they often come with serious institutional impact. After all, BSA is generally part of a safety and soundness exam, and one of the more important aspects of an institution’s regulatory relationship. With that in mind, what steps can help make an exam successful? The outcome should be a satisfactory rating from the examiners, but what preparation should a BSA Officer take to get these highly sought-after results?
Regulatory guidance on BSA exams
The good news is that there is guidance for BSA examination preparation. The most important tool and a BSA Officer’s guide to success is the Federal Financial Institutions Examination Council (FFIEC) BSA Examination manual. This manual is written for examiners and it clearly outlines all review steps that could be taken during a regulatory exam. The FFIEC is an interagency body empowered to prescribe uniform principles, standards, and report forms and is composed of:
- Board of Governors of the Federal Reserve System (FRB)
- Federal Deposit Insurance Corporation (FDIC)
- National Credit Union Administration (NCUA)
- Office of the Comptroller of the Currency (OCC)
- Consumer Financial Protection Bureau (CFPB)
- State Liaison Committee (SLC)
As you can see, these agencies encompass all traditional financial institutions, so this one-stop guide for exam preparation should be used as your primary guide.
Other helpful guidance is from the Financial Crimes Enforcement Network (FinCEN) in conjunction with the regulatory agencies in their guidance on risk-focused supervision. This document was also written for examiners and recognizes the exam burden for financial institutions. The guidance emphasizes a risk-focused approach to examinations and refocuses the regulators to scope each exam according to the unique financial institution, not to use a one-size-fits-all approach.