New BSA Examination Procedures Now Available

The FDIC, OCC, and the Federal Reserve recently published updates of their Bank Secrecy Act exam procedures, each incorporating changes made by the USA PATRIOT Act.

The FDIC republished its entire BSA examination procedures, incorporating changes to address the regulations on foreign correspondent accounts, data-match requests and information sharing. The new procedures also incorporate new requirements for customer identification programs, as the October 1 effective date has passed.

The revisions provide a more proactive approach to risk-based BSA review. Basic procedures will be used during all exams, while expanded procedures will be used for banks engaged in activities presenting a high-risk for money laundering or where weaknesses in the bank's anti-money laundering program are detected.

The pre-examination procedures will include assessments of money laundering risk and board-approved BSA policies and procedures, along with OFAC, CTR, and SAR compliance. During the exam, examiners will review BSA training records, exemptions from CTR filing and other BSA documentation. Examiners will also review the bank's most recent BSA/anti-money laundering audit.

The full text of the procedures is at www.fdic.gov, FIL 79-2003.

Rather than republish the whole exam, the Federal Reserve and OCC issued only supplemental procedures for examiners that address foreign correspondent accounts, the data-match requests from FinCEN under section 314(a) of the USA PATRIOT Act and voluntary information sharing on suspected money launderers or terrorists permitted between financial institutions that have registered with Treasury. The procedures supplement existing procedures, and are designed to let examiners tailor BSA exams to the reliability of the bank's compliance management system and the level of risk presented by bank activities.

The Federal Reserve procedures, SR 03-17, are at www.federalreserve.gov

The OCC procedures are at www.occ.treas.gov, OCC Bulletin 2003-43.

Copyright © 2004 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 13, No. 11, 1/04