BSA Founda+ons. Back to Basics. September 15, 2016 Prepared by: Terri Lu8rell, CAMS-Audit

Transcription

1 BSA Founda+ons Back to Basics September 15, 2016 Prepared by: Terri Lu8rell, CAMS-Audit

2 Agenda 01 What do you mean I m the new BSA Officer?! 02 What are the expecta;ons of a BSA Officer? 03 What are the primary job du;es of a BSA Officer? 04 What are current regulatory hot bucons? 05 How do I stay current on regulatory changes? 06 Wrap up and conclusion

3 Importance of the BSA/AML Professional Detects Possible: o Money Laundering o Terrorist Financing o Fraud o Elder Financial Exploita;on o Human Trafficking o Human Smuggling o Narco;cs Smuggling o Arms Smuggling Informs law enforcement. Keeps your insbtubon sound!

4 What do you mean I ve been appointed BSA Officer?! Pillars of BSA - FFIEC Exam Manual: v Internal Controls v Designated BSA Officer v Training v Independent Tes;ng v CDD Requirements

5 Internal Controls On a risk based approach: Policies, Procedures, and Processes for all aspects of BSA/AML o Include EDD higher risk products, services, geographies o Board repor;ng of SAR ac;vity to the Board (or a commipee) o Iden;fy responsibili;es for BSA du;es o Have BSA con;nuity program in place o Dual control to the extent possible o Train, train, train implement Quality Assurance process o Hold staff accountable with job descrip;ons, goals, and performance evalua;ons

6 Independent Testing v Independent internal audit or third party v Address the overall adequacy and effec;veness of the program o Policies, processes and procedures o BSA/AML Risk Assessment o BSA repor;ng and recordkeeping requirements o CIP implementa;on o CDD policies, procedures and processes o Transac;on monitoring o Higher risk customer reviews (EDD) o Training

7 Designated BSA Officer v Must be appointed by the Board of Directors v Must have necessary authority and resources v Must have necessary experience level to complete du;es v Must have adequate and competent staff

8 Training v Support and training from the Execu;ve Suite v Must be customized for each line of business v Accountability of employees v Tracking and documenta;on v Include examples of money laundering and tax evasion v Cover applicable policies and procedures v Make it fun!

9 Customer Due Diligence Requirements v ImplementaBon date May 11, 2018 v FinCEN Guidance: o Determine whether the customer is ac;ng as an agent for or on behalf of another o If a customer is a legal en;ty that is not publically traded in the US, obtain informa;on about the structure or ownership of the en;ty o If the customer is a trustee, obtain informa;on about the trust structure to determine who has ul;mate control

10 Customer Due Diligence Requirements Four key elements to the final rule: v Iden;fy and verify the iden;ty of customers. v Iden;fy and verify the iden;ty of the beneficial owners of these accounts (25% or more). v Understand the nature and purpose of customer rela;onships. v Conduct ongoing monitoring to maintain and update customer informa;on and to iden;fy and report suspicious transac;ons.

11 Suspicious Activity Monitoring Program Cornerstone of your BSA program v Risk based approach v May be manual or automated (or combina;on) v Customized to fit your ins;tu;on and customer base v Ac;vity must be ;mely reviewed v Parameters should be reviewed periodically

12 SAR Completion and FiIing v Timing 30 days from date of detec;on v SAR Quality v Narra;ve Quality o Who, what, when, where, how, and why? o Tell your story; who are you wri;ng to? o Organiza;on o Quality Assurance process in place

13 Currency Transaction Reports v Must be filed within 15 days of the date of transac;on v Must be accurate and complete v If you have the non-cri;cal informa;on available on your systems, you should include that on the CTR

14 Record Keeping Requirements v BSA forms and documenta;on must be retained for 5 years v CIP documenta;on must be retained for 5 years from date the account closure

15 Monetary Instrument Log v Common way to launder money v Must record all purchases of monetary instruments (MIs) between $3,000 and $10,000, inclusive v However, suspicious ac;vity monitoring should include ALL MIs; including if any was purchased in cash

16 Risk Assessment v Iden;fies inherent risks, mi;ga;ng factors, residual risks v Should have a summary page with overall ins;tu;on ra;ng v Must be Enterprise Wide v Iden;fied specific risk categories o Products/Services o Customers and en;;es o Geographic loca;ons v Any iden;fied risk area needs a deep dive - details v Updated periodically or upon any ins;tu;onal change

17 Data Integrity Ensure all relevant source files are feeding into your suspicious ac;vity monitoring sogware properly v Garbage in is garbage out v Compare all customer data (CIS/CIF) to monitoring system v Sample all transac;on types to ensure consistency v Should be ongoing

18 OCC BulleBn Model Validation v Validate algorithms and reasonable output of alerts v Validate the incoming source feeds v Validate that parameters are properly set for the ins;tu;on

19 Regulatory Hot Buttons v CDD/EDD onboarding processes v Higher risk customer documenta;on and review v Procedures do not match Board approved policy v Risk Assessment is not thorough enough or not current v No op;miza;on (tuning) of suspicious ac;vity monitoring parameters v No Model Valida;on performed on automated system v Repeat findings or inac;on from the ins;tu;on The BSA program is now yours OWN IT!

20 Be Proactive Not Reactive Con;nue increasing your BSA knowledge o Learning webinars o Conferences o User Groups o Join FinCEN and regulatory agency s o Establish Google alerts to stay informed o Read, read, read Take all of these steps BEFORE the regulators give consent order, or worse If any audit or exam findings, ACT AND TRACK Use your consultants if you don t have the ;me

21 Today's Lessons Learned v BSA Officer job is cri;cal to the safety and soundness of your ins;tu;on v The Five Pillars of BSA must be adhered to v When in doubt, use your consul;ng references, the FFIEC Exam Manual, your regulatory agency, or FinCEN. Use your experts!

22 Why are our jobs meaningful?

23 QuesBons?