On July 22, the federal financial institution regulatory agencies: Office of the Comptroller of Currency (OCC), National Credit Union Asministration (NCUA), Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board of Governors, in conjunction with the Financial Crimes Enforcement Network (FinCEN), issued a Joint Statement on Risk-Focused Bank Secrecy Act/Anti-Money Laundering Supervision.
The Joint Statement is the third statement from a working group tasked with improving the effectiveness of the Bank Secrecy Act/anti-money laundering (BSA/AML) regime. This Joint Statement primarily reinforces basic concepts of risk-based compliance programs and risk-based supervision and is intended to “improve transparency into the risk-focused approach used for planning and performing BSA/AML examinations.”
Financial institutions are expected to utilize a risk-based BSA/AML compliance program, which is heavily dependent on their risk assessment. Examiners review a financial institution’s BSA/AML compliance program relative to its own unique risk profile. Consequently, every financial institution BSA/AML examination is different. In general, examiners spend less time on those areas deemed lower risk by the financial institution and where there are high-quality risk management processes in place to combat potential money laundering, terrorist financing and other illicit financial activity.
Specifically, the Joint Statement reiterates that the federal bank regulatory agencies “evaluate the adequacy of a bank’s BSA/AML compliance program relative to its risk profile, and that bank’s compliance with applicable laws and regulations.”
Although the Joint Statement does not establish any new requirements, it does serve as a reminder as to how the federal bank regulatory agencies scope their BSA/AML examinations and, therefore, how banks should design and evaluate their compliance programs in order to meet their BSA requirements and satisfy examiner expectations.