A ‘Positive Step’ -- Bank Secrecy Act/Anti-Money Laundering Exam Manual Revised

A ‘Positive Step’ -- Bank Secrecy Act/Anti-Money Laundering Exam Manual Revised
The recent revisions to the Bank Secrecy/Anti-Money Laundering Exam Manual are being seen as a move in the right direction by those close to the subject. According to Sepideh Behram, Senior Compliance Counsel at the American Bankers Association, the revisions made to the 2007 version reflect “certain points of clarification.”

The Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, and Conference of State Bank Supervisors revised the manual in collaboration with FinCEN, the administrator of the BSA. The Office of Foreign Assets Control (OFAC) collaborated on the revisions made to the section that addresses compliance with economic and trade sanctions administered and enforced by OFAC.

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“We see it as a move in the right direction. During the revision process, a subcommittee formed to review the examination process heard feedback from the industry. And they’ve taken a great deal of our feedback and incorporated it in to these revisions,” Behram said.

The BSA/AML issue is a complex and perplexing (at times) for bankers to go through, Behram noted. “It’s not easy to sit down and absorb 400 + pages on a subject and become an overnight expert,” she noted. The revised manual addresses “Some of the issues we’ve brought up over the past year. It’s a positive step for our institutions because it provides clarifications, sheds some light on guidance and best practices for examiners in the field.”

Behram praised the call for consistency across the board for examiners. She said that they’re also hoping to see FFIEC’s joint agencies have cross training for examiners for “Even further consistency. We’ve always been a proponent of cross training so that the examiners know the exam manual as well as our bankers do,” she explained.

The exam manual is for the examiner, it should be a roadmap for the examiner and what the institution can expect during an examination, she added.

These revisions will also help examiners increase their knowledge and experience in detecting money laundering. Precise estimates don’t exist for the amount of money that is laundered worldwide every year, but the International Monetary Fund estimates the figure at between $590 billion and $1.5 trillion - two to five percent of the entire global gross domestic product, said John Reich, Director of the Office of Thrift Supervision during a speech given to the FFIEC Advanced BSA/AML Specialists Conference.

“Today, money laundering and terrorist financing remain major challenges for our banking institutions that are the gatekeepers to the financial system. The 2007 National Money Laundering Strategy—issued jointly in May by the Treasury Department, Justice Department, and Homeland Security—listed the continued safeguarding of the banking system as “Goal No. 1,” Reich added.

“There is also another positive and unmistakable sign that our efforts are bearing fruit—that financial institutions and federal regulators are making substantial progress in identifying, clarifying and complying with BSA/AML requirements. Consolidated Quarterly Report statistics compiled by FinCEN show that since 2005, enforcement actions related to BSA compliance have declined for the OTS, as well as the FDIC, OCC and the Federal Reserve. This decline signals that BSA compliance, which was new and little understood just a few short years ago, is becoming ingrained in the operations of federally regulated financial institutions,” Reich noted.

About the Author

Linda McGlasson

Linda McGlasson

Managing Editor

Linda McGlasson is a seasoned writer and editor with 20 years of experience in writing for corporations, business publications and newspapers. She has worked in the Financial Services industry for more than 12 years. Most recently Linda headed information security awareness and training and the Computer Incident Response Team for Securities Industry Automation Corporation (SIAC), a subsidiary of the NYSE Group (NYX). As part of her role she developed infosec policy, developed new awareness testing and led the company's incident response team. In the last two years she's been involved with the Financial Services Information Sharing Analysis Center (FS-ISAC), editing its quarterly member newsletter and identifying speakers for member meetings.

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