Bank Secrecy Act/Anti-Money Laundering Examination Manual Update

On February 25, 2021, members of the Federal Financial Institutions Examination Council ("FFIEC") released several updated sections and related examination procedures to the Bank Secrecy Act/Anti-Money Laundering ("BSA/AML") Examination Manual (the “Manual”) that provide instructions to examiners when assessing the adequacy of a bank’s BSA/AML compliance program. Note that the update does not establish new requirements; however, it provides a more transparent breakdown of the examination process and supports risk-based examination work.

FFIEC’s risk-focused approach to BSA/AML supervision is highlighted by the new introductory section, which provides an overview of how examiners should establish their exam scope and plan for examinations. More specifically, the examiners are now directed to: 

• Focus their review of risk management practices and compliance with BSA regulatory requirements on areas of greatest ML/TF and other illicit financial activity risks.

Assess whether the bank has developed and implemented adequate processes to identify, measure, monitor, and control those risks and comply with BSA regulatory requirements.

The Manual updates the “Customer Information Required” subsection to add language regarding the opening of an account for a customer who has applied for, but has not yet received, a tax identification number (“TIN”), and an alternate process for obtaining CIP identifying information for credit card accounts:

• TIN - The bank’s CIP must include procedures to confirm that the TIN application was filed before the customer opened the account and the TIN must be received within a reasonable amount of time after the account is opened.
• Credit Card Account – the bank may obtain CIP identifying information from a third-party source prior to extending credit to the customer.

The Manual also expands the “Comparison with Government Lists” subsection to clarify that CIP must include procedures for determining whether the customer appears on any list of known or suspected terrorists or terrorist organizations. Further, an “Exemptions” subsection is added noting that regulators may grant any bank or account exemptions from the CIP requirements. For example, loans extended by banks and their subsidiaries to customers to facilitate the purchase of property or casualty insurance policies are exempted from CIP requirements, because these “premium finance loans” were determined to present a low risk of money laundering or terrorist financing.

The “Aggregation Requirements” section is updated to reflect circumstances when multiple related currency transactions resulting in either cash in or cash out totaling more than $10,000 must be treated as a single transaction. A new “Structured Transactions Requirements” section is added, which describes the structuring of transactions, which occurs “when a person, acting alone or in conjunction with, or on behalf of, other persons, conducts or attempts to conduct one or more transactions in currency, in any amount, at one or more financial institutions, on one or more days, in any manner, for the purpose of evading the CTR requirements.”  Structuring is a crime, and the bank must file a Suspicious Activity Report (“SAR”) if it suspects that someone is structuring transactions to evade a Currency Transaction Report (“CTR”) filing. When filing a CTR, “known customer” or “bank signature card on file” is now deemed insufficient and the individual’s specific identifying information must be included in the CTR.

The Manual reaffirms that at least once a year banks must review the eligibility of exempt persons to determine whether they remain eligible for exemption. An “Operating Rules” section is added, which outlines the steps a bank must take to determine the qualifications of an exempt person and document the process.  Specifically, a bank must make “reasonable and prudent” steps to ensure that a person is an exempt person, and document the basis for that conclusion. Further, the Manual notes nothing in the Transactions of Exempt Persons regulations relieves a bank of any other reporting or recordkeeping obligations imposed by FinCEN’s BSA regulations.

If you would like to learn more about these updates, please reach out to your respective Sia Partners contact. With our extensive abilities in compliance including former U.S. regulators on staff, Sia Partners is ready to assist our clients on managing all their compliance needs. Sia Partners Consultants can provide the necessary expertise to review your BSA/AML compliance program(s) to ensure appropriate sufficiency with the new amendments.

Federal and State Regulators Release Updates to the BSA/AML Examination Manual  

ASSESSING COMPLIANCE WITH BSA REGULATORY REQUIREMENTS - Introduction 

ASSESSING COMPLIANCE WITH BSA REGULATORY REQUIREMENTS - CUSTOMER IDENTIFICATION PROGRAM

ASSESSING COMPLIANCE WITH BSA REGULATORY REQUIREMENTS - CURRENCY TRANSACTION REPORTING

ASSESSING COMPLIANCE WITH BSA REGULATORY REQUIREMENTS - TRANSACTIONS OF EXEMPT PERSONS