We are a small community bank in Utah. Does anyone have any recommendations for consulting firms that provide an excellent BSA independent review? Thanks

What perfect timing for your question. We currently have ICS ( Intergrated Compliance Solutions) here in our bank doing just that. They are located out of New Jersey but do travel. John C Soffronoff is the president, Tel. 856-439-1490. Good luck to you.

Good timing here as well, as a firm is leaving us pretty soon. I think they're overkill for a small community bank, though, they specialize in international correspondent banks.

Are you considering 'sponsoring' the review through your attorney so that the work falls under attorney-client privelege?

AML-B, exactly how would you do that? We already contracted with someone for the end of September, but what a great idea!

The contract has to be initiated through corporate counsel, first of all. Then you'll have to segment your email/memo traffic/ meeting minutes into a separate 'folder' and establish a tag line into your emails for the review that says something like "The contents of this electronic message are an attorney-client work product and ......" Corporate counsel can word it. When I've done those, we've even read a similar disclaimer at the start of teleconferences.

Hmmm... what a great concept.

Why the ACP - what will it buy you?

1. You do the review under ACP.
2. You find something.
3. The regulator shows up and you don't provide them with proof of an independent test.
4. They immediate write you up for not having one.
5. They dig hard because you haven't conducted an independent test.
6. They find what you found.
7. People in blue show up and start passing out handcuffs.

or the other scenario

1. You do the review under ACP.
2. You don't find anything or you give the regulators the report anyway.
3. You write a check twice the size you should have for the review.

I see little advantages unless you really believe that your BSA program is leaking like a sieve. It is not like you're are trying to protect yourself from civil liability as maybe you would in the case of a fair lending review.

...or the other, other scenario.

1. You pay a consultant to review something.
2. Being consultants, they find something, anything. Because, at whatever astronomical rate they're charging, it would seem lax to say "They're in good shape." Perhaps it's something really earth-shattering like Medellin being mis-spelled on a document.
3. They present a report with a finding, and a recommended corrective action plan.
4. Regulators come in. Read the review, see a finding and a corrective action plan.
5. Not being idiots themselves, they adopt the consultant's finding and being regulators 'add value' to the corrective action plan.

Now instead of a recommendation that can be put into context with facts, circumstances and evidence, you're the proud owner of an official corrective action plan.

Good debate, but if the independent review is for the purpose of complying with the regulatory agency's BSA program regulations, structuring it in such a way as to fall under attorney-client privilege will not be advantageous in your relations with your regulatory agency. The agency will expect to see the independent report (the work papers as well if they so desire).

The attorney-client privilege might mean the agency could not extract the report from you in a court proceeding, but they have no need for that. They will simply ask you for it. If you don't give it to them, they will cite you for not having done an independent review and then decide on what punishment to mete out. (According to the statute, an enforcement action would be automatic.)

The Medellin point (FYI, I had to look up the spelling) I concede; in the current environment every outside evaluator is afraid to walk out the door without finding something. You can't hire your regulators, but you do hire your independent examiners and determining their interest in "Trivial Pursuit" should be as much a part of the hiring process as the fee. They should understand going in that "significant" findings will be accepted as such. "Insginificant" findings interpreted as significant findings will have a direct effect on your assessment of their abilities and will limit their tenure with your bank.

Hijacking in progress: does anyone know of a consultant you could recommend to IA? My contacts are on this side of the Great Divide and their bills for travel time and expenses would eat up the budget of a community bank.

Our legal staff's thought on the ACP is that after receiving findings in an oral report, you can "co-craft" the written report to something you have no problem handing over to the examiners.

As an aside...

For the life of me I have never been able to figure out why some banks don't want to hand over their "findings" from audits and compliance reviews to the examiners (except in very rare instances...a Fair Lending review being a good example as pointed out above).

The argument I always hear is that we don't want to do their work for them. Why not? I have always loved doing their work for them. We do the work, find issues, initiate corrective action. If the examiners want to take that and pop it into their report and not dig too much deeper, great.

I've even seen banks (hypothetical, of course) that would pay for a compliance review, get a written report, and then tell the examiners they only got a verbal presentation in order to not provide the written document to the examiners and "do their work" for them. [Some might even call lying to the examiners a felony, but I won't go there since this was a hypothetical bank.]

Having been a regulator in a previous life, it is fairly apparent when banks try to "hide" their internal findings and that only damages the bank's credibility with the examiners. Once your credibility is damaged, the examiners will dig even harder.

As a consultant I find this string rather disturbing. It doesn't matter if you have an internal audit department, attorney, or an outside consultant perform a review for BSA, the bottom line is that if you don't have one that includes a thorough scope to show the examiners(what I mean by this is I have seen some poor ones completed by attorney's, CPA's, etc.) mostly due to financial institutions trying to be cheap. Cheap and BSA do not go together. If you are trying to cut costs when it comes to BSA you might as well get out of banking because this will continue to be one of the most expensive areas of oversight and if you choose not to spend it up front you will get yours in the end (see AmSouth and Riggs).