Don't Overlook Private Banking
Rick Small, the FRB's guru on Bank Secrecy, recently testified before the Senate's Permanent Subcommittee on Investigations, Committee on Governmental Affairs. In his testimony, Small identified what he described as essential elements associated with sound private banking activities. These include:
- Senior management oversight of private banking activities and the creation of a corporate culture that supports risk management and maintains controls.
- Due diligence policies and procedures that require the organization to obtain customer identification, determine sources of funds, and identify suspicious activity.
- Information systems that enable the bank to monitor for and report suspicious activity.
- Controls, including segregation of duties, to prevent insider misconduct.
Small stated that these elements have been identified as essential through examinations. Banks that succeed in compliance with BSA have these elements in place.
Small also noted positive trends in the private banking industry, including strong risk management controls and the use of software and hardware to improve service to customers and support more effective identification of suspicious activity.
Copyright © 1999 Compliance Action. Originally appeared in Compliance Action, Vol. 4, No. 13 & 14, 11/99
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