Perform Due Diligence Like a Pro
The first step to complying with the rules is to know what they are. As you know, the BSA/AML Exam Manual outlines what is expected of your policies and procedures. Beyond that, a BSA Officer is responsible for implementing, updating and maintaining their program successfully. In other words, they should talk the talk and walk the walk!
So what steps can you take toward taking your anti-money laundering (AML) program to the next level?
Monitor beyond the minimum. Transaction monitoring, of course, is an important component of AML. The question is, how should it be done? Some BSA departments monitor transactions manually. Others use a complex, risk-based system to help manage it all. The most successful BSA/AML programs have controls in place to compare actual vs. expected activity, investigate potentially suspicious activity and document and report it, if necessary.
Practically perfect parameters. In automated AML systems, parameters should be clear, calibrated and carefully set. The institution should understand why they were set and what they mean; it should not rely on them unquestioningly. Parameters should be fine-tuned to help minimize false positives, or unnecessary “noise” within the system. An institution that does this well will enjoy greater efficiency and a clearer picture of what is truly suspicious.
Updates all around. A BSA program needs to be flexible. Regulations change, new products and services are introduced at the institution, and new or emerging risks are discovered. In a successful BSA program, these changes are taken into account, considering a variety of factors. Periodic updates apply to an institution’s risk assessment, AML system parameters and BSA/AML policies and procedures, to name just a few areas.
Perform due diligence like a pro. Customer due diligence (CDD) is the cornerstone of a BSA program. Its purpose is to develop customer profiles and understand the risks that may be associated. Furthermore, performing enhanced due diligence (EDD) is a whole separate task, necessary for customers with an elevated risk profile.
Performing CDD and EDD can be time-consuming. However, certain elements of it can be working in the background. To assist with CDD, Banker’s Toolbox recently started offering access to a tool called Negative News. Negative News, powered by NominoData, is a search engine tool that checks the web for recent and historical relevant customer information. Every 24 hours, it scans for thousands of combinations of “dirty” keywords such as embezzlement, fraud, bribery, accused, convicted and more – even among the results that criminals have hidden from search engine optimization (SEO) results. By scanning the web for this type of information, BSA Officers can have more confidence in the fact that they fully understand their current or potential customer.
One institution that does CDD well knows this to be true. Its Negative News search displayed a pertinent article that was buried four pages down on Google results. By researching their customers on the web, they were able to be proactive in their CDD, investigate the issue and take action, if necessary. On the other hand, some institutions have room to improve. By neglecting to be proactive or ignoring allegations, an institution’s CDD and EDD can both take a hit.
At Banker’s Toolbox, we know that maintaining a successful BSA/AML program is an ongoing endeavor. Even if you are comfortable with your current program, it seems like there is always an area on which to improve. It may be part of the territory for a BSA Officer, but we promise, it doesn’t have to be overwhelming!