BSA Enforcement

Even without the added teeth of the USA PATRIOT Act, the regulatory agencies are taking action to enforce violations of the Bank Secrecy Act. The enforcement actions include building strength in the BSA compliance program.

Recently, the Federal Reserve published BSA enforcement actions. The corrective actions required are instructive.

Under the July 25, 2002, agreement with Community First Bank and Trust of Celina, Ohio, the bank must identify and correct all previous violations. To accomplish this, the bank must retain a "qualified independent firm" to conduct a comprehensive review of the bank's anti-money laundering program. The firm's work must include "a forensic review of account records from January 1, 2001 to the present" to identify and correct any CTR and SAR filing failures.

The bank must also develop policies and procedures designed to ensure future compliance. The program must be detailed and specific enough to include procedures and controls for all provisions of BSA, including recordkeeping and reporting.

The Federal Reserve Bank of Philadelphia reached an enforcement agreement with Madison Bank of Blue Bell, Pennsylvania. While not required to retain a consultant to conduct a forensic review of accounts, Madison Bank is required to take steps to build an anti-money laundering program that satisfies the Federal Reserve.

This agreement also requires the bank to correct all deficiencies and violations of BSA. The bank must conduct a comprehensive review of internal controls and procedures for the entire program, including suspicious activity reporting, and develop an acceptable compliance program.

Both enforcement actions specify correction of all violations, procedures for recordkeeping, and controls to ensure that the program is effective. Both agreements also require independent testing and fully documented, regular audits of the program. The agreements both emphasize segregation of duties as essential. Written policies and written procedures are essential.

Prudent compliance managers will review their anti-money laundering programs for these elements as they revamp the programs to meet the requirements of the USA PATRIOT Act.

Copyright © 2002 Compliance Action. Originally appeared in Compliance Action, Vol. 7, No. 12, 10/02