Bank Regulation

Federal Agencies Weigh In On Sharing Bank Secrecy Act Resources

Five federal agencies spoke on Wednesday (Oct. 3) on how community banks and credit unions can share resources to boost anti-money laundering (AML) efforts, and make Bank Secrecy Act (BSA) compliance streamlined.

The agencies include the Federal Reserve Board, the Financial Crimes Enforcement Network, the National Credit Union Administration, the Federal Deposit Insurance Corp. and the Comptroller of the Currency. Those agencies issued a statement detailing the collaborative efforts that could be made in the above mentioned goals of compliance.

“Collaborative arrangements as described [by the agencies],” they said in a statement, “generally are most suitable for banks with a community focus, less complex operations, and lower-risk profiles for money laundering or terrorist financing. The risk profile is bank-specific, and should be based on a risk assessment that properly considers all risk areas, including products, services, customers, entities, and geographic locations.”

Such efforts would involve two or more banks, they said, and extend across managing internal controls, testing compliance, and designating individuals to oversee compliance.

“The cost of meeting BSA requirements and effectively managing the risk that illicit finance poses to the broader U.S. financial system may be reduced through sharing employees or other resources in a collaborative arrangement with one or more other banks. These arrangements may also provide access to specialized expertise that may otherwise be challenging to acquire without the collaboration,” read the statement.

In one example, internal controls can be made more efficient when two or more banks pool their resources to update and draft BSA/AML policies and procedures or review and draft risk-based customer IDs.

A bank’s board of directors “must designate a qualified individual or individuals to serve as the BSA compliance officer. The sharing of a BSA officer among banks could be challenging due to the confidential nature of suspicious activity reports filed and the ability of the BSA officer to effectively coordinate and monitor each bank’s day-to-day BSA/AML compliance,” the agencies said.

The agencies also noted that “sharing of a BSA officer may create challenges with effective communication between the BSA officer and each bank’s board of directors and senior management. Accordingly, it may not be appropriate for banks to enter into a collaborative arrangement to share a BSA officer.”

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