BSA Officer Reporting Directly to BOD

Answer by Ryan Rasske:In today’s environment, regulators are looking very closely at how much involvement the Board of Directors have in a bank’s BSA program. It is critical that members of the Board fully understand changes in the federal regulations as well as developments within their institution. By asking a few questions, examiners will determine very quickly if the Board has adequate knowledge of the banks BSA program. While it is not a regulatory requirement for the BSA Officer to report directly to the Board, it is very important that the Board fulfills their BSA responsibilities:

• Must designate a qualified individual to serve as the BSA Officer and ensuring they have sufficient authority throughout the bank.
• Must approve the bank's written BSA/AML Compliance Program that addresses internal controls, independent testing, designating a BSA Officer and training for appropriate personnel.
• Must receive sufficient and frequent updates on the status of the banks BSA/AML program and notified of SARs filed.
• Should receive ongoing BSA training to understand the importance of regulations and ramifications of non-compliance.

In order to avoid any potential problems, it might be a good practice for the BSA Officer to personally interact with the Board (e.g. during quarterly Board meetings) and provide them with reports (verbal and/or written) that adequately describes the status of the bank’s BSA/AML program. This will clearly demonstrate to your regulators that the Board is involved and receives frequent communication on this very important topic.