We can't seem to get our employees to consistently comply with the CIP Rules. They aren't filling out the forms properly, using expired driver's licenses, PO Boxes, or just skipping the CIP all together. Just curious as to what other bank's are doing to "encourage" their employees to complete these forms???

We started doing a monthly random verification for both deposits and loans. The results go to senior management, Compliance Council and the Audit Committee. The method seems to have worked (along with numerous aids on the Intranet and lots and lots of training).

The results of the test DO go to senior management, the compliance officer, and then to the Board of Directors. Not working though........

Violations of the Bank Secrecy Act have to be treated very seriously from the BOD down. We can't seem to get employees to do their jobs is not going to cut it when the BOD is looking at an MOU or a C&D. Management needs to put some teeth behind these types of issues and insist that less than perfect on BSA compliance is not tolerated (minus the one or two errors that are bound to occur).

As DS said, there is a need for a second review at your institution and it may need to be for more than a random review at this point. This is something that management needs to firmly react too and show the regulators that they are serious about BSA compliance. You have already self-identified the problem. Failure to address it and put in place proper internal controls is not going to go over too well with the regulators.

What kind of "teeth" do you recommend? Three strikes and you're out?

How about one or two, if it not a legitimate oversight (or three if you wish). There are always those weird situations were someone just makes a mistake. However, for example, the exceptance of an expired government document at acount opening, as it is such a basic part of your CIP program, should be inexcusable. Review your CIP forms and other guidance to make sure that they are as idiot proof as possible, conduct additional training and what ever teeth you decide on - roll it out at the same time. That way everyone is re-trained and also explain the consequences for further non-compliance and there should be no more excuses.

I know that it is our decision regarding the "teeth" we should put behind violations, but what are banks doing to repeat offenders? Cutting raises, bonuses??

Termination is a popular "tooth" in the banks that I audit for repeat offenders.

BSA Violations/CTR Errors/CIP Exceptions all get monitored and recorded on Excel Sheets and presented at our Compliance Meetings. These numbers (along with other errors the branches may have in other departments) do affect their bottom line when it comes to a Manager's bonus. This tends to "encourage" them to comply.

With repeat offenders, we terminate them because they are not following bank policies and procedures.

Also, with the new enforcement provisions for BSA/AML violations, non-compliance with the BSA/AML requirements could be considered about the same as walking away from your teller window with your cash drawer wide open. How many times do you allow a teller to do that? IMHO - Getting an MOU or C&D is going to cost you a lot more than what someone might grab out of a teller drawer and it should treated as such.

Tooth #1: Termination for repeat offenders
Tooth #2: All violations appear on the yearly review and affect the total amount of salary increase and bonus dollars.

The problem we have had is more with lenders not supplying the branch staff with adequate information. I know an "ideal" situtation would be the Personal Banker refuses to open the account until given the needed info...but you tell me; how many of your entry-level PBs will say no to a BP, SVP, or EVP? To fix these issues, a reprimand has to come from the BOD and Chief Lending Officer. Please don't make your branch staff stand up to the senior lenders...we all know who wins those arguements.

Several of you have suggested that the Old Heave-Ho is the approach to be taken, but I don't know that we can justify firing staff when we only have 32 employees. And I know that it would be cheaper to fire them than to pay the BSA penalies for non-compliance. I am tyring to produce alternatives for senior management. I can't see them firing anybody.

Other than everything that has been mentioned - firing, lowering annual raises/bonuses, or more more more training there is probably nothing else you can do.

Maybe show the BSA penalties. IF there is no Bank the people will have no jobs. Furthermore, they can be personally liable for willful violations.

You then have your work cut out for you. Whether a bank has 10 or 1,000 employees, afraid to fired someone for not doing their jobs is a sure indication of a severe weakness at the management level. With that attitude, I'm sure that this issue is just the tip of the iceberg. Whatever you decide to present, I wish you the best of luck.

I would think that one might get the point across to the others...

My thoughts exactly, Kurt.

Our BSA Officer reviews CIP documentation for each new customer on a daily basis. This has greatly reduced the number of "errors." Most errors are just mistakes made in entering the data onto our forms. This is why we have the lenders and CSRs make copies of all documents required under our CIP procedures.

It's not perfect, but it seems to be working. We haven't had anything major since we started this process.

Our CIP worksheets have a place for the person completing the CIP worksheet, a place for the person entering the information into the computer and a place for an additional person (reviewer) to initial that all is correct before sending to be imaged. Once the worksheets are imaged they are sent to the BSA Officer. The BSA Officer checks & verifies that the worksheets were imaged correctly. If the BSA Officer finds anything wrong the forms are sent back to the branches to be corrected & re-imaged. We also have a daily report of all new customers that is checked against to make sure that the CIP worksheets have been completed & imaged. This procedure has helped.

This is a performance management issue that should carry strict, but graduated, consequences, just as any other performance issue should. If it is difficult to get employees to comply with BSA, I'm willing to bet there are other performance issues over which management is simply throwing up its hands in exasperation. Or maybe they are just throwing up!

The fact that you have "only" 32 employees shouldn't relegate you to a position of helplessness, hopelessness and feeling you have no recourse. Hopefully, the bank has some HR resource or consultant it can draw upon. If it doesn't, it should find one and get their advice on appropriate ways to respond to poor performance, including termination. And let's not sugar coat this. Not doing the job as described is poor performance. If the feeling in your bank is, "It's ONLY CIP..." there is a significant management issue here, which will be of greater interest to examiners than the CIP problem. AR.

P.S. I still can't take my eyes off of AuditGuy's pic!

As the BSA/Compliance Officer/Commercial Lender/Real Estate Lender/Installment Lender/Credit Analyst/Loan Review Officer/... etc in a small bank. There are not enough hours in the day to baby sit each employee to make sure they are doing CIP's correctly on a daily basis. At some point in time you have to just say it’s their job to do it right and let them know there is a ZERO tolerance policy for BSA/CIP errors. The BSA Independent Audit function has been doing quarterly follow up monitoring on CIP's in 2007 with training by the BSA Officer after each quarterly report and there continue to be an unacceptable number of errors.

AR: You crack me up! Not only do I read your posts for value, you make me laugh. Thanks.

Have a great 3 day weekend!

Honestly, monetary rewards for doing the right thing may be the way to go here. I agree that it would be difficult to fire everyone and have no one to even open the doors in the morning, so this situation may involve a "few-step" program.

There was a recent study about a company that tried various incentives for employees to lose weight. The employees that lost the most weight were offered the most money for each pound lost. So, you may want to offer a $10 bonus to an employee for each account where the CIP is done correctly, but $20 gets deducted from their bonus pool for any mistake. (Obviously, if they go in to the minus, they simply get nothing, so let's not debate labor/payroll laws!)

Perhaps that program can be tried for 6 months, and then you announce to the staff, so now that you can do this correctly, be advised that xx strikes and you're out. For those remaining employees, a bonus pool will be shared based on how well this task is being performed.

If you think about it, a $10 bonus per correct account would be WA-A-A-A-Y cheaper than trying to hire and train all new staff, and REALLY, REALLY, REALLY cheaper than BSA penalties and enforcement actions.

Just my two cents!

"The BSA Independent Audit function has been doing quarterly follow up monitoring on CIP's in 2007 with training by the BSA Officer after each quarterly report and there continue to be an unacceptable number of errors. "

You are headed for a C&D and maybe management should consider expanding the staff too at least 33 people andstrengthen internal monitoring rather than relying on outside quarterly reviews. The feedback needs to be immediate - not a month or two or three later.

The common practice for CIP is to have an immediate review and exception process like a new loan exception report. I'll bet there is someone in the bank who reviews new deposit accounts for missing agreements, etc. That is often where the CIP review (for accounts) is housed. CIP exceptions should be flagged separately, and BSA and the offending branch notified immediately. The report should be issued to management frequently, and the exceptions aged. Look at your bank's loan exception process for a model.

Take a look at your BSA/AML program. What does it say about how long accounts will be held open in the absence of correct CIP? That is your time frame for corrections.

Here's a thought. Read this to the offenders, particularly Item 7, and tell them this is what is coming.
http://www.fdic.gov/bank/individual/enforcement/2007-05-02.pdf
then tell them that the cost of compliance with the C&D will be split equally among the offenders. Maybe that will work.