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InfoSight Highlight: FinCEN BSA Leadership Expectations
Friday, October 21, 2016 6:25 AM

An Effective BSA/AML Program Tested by a Competent, Independent Party

The appropriate involvement of a credit union’s leadership in its BSA/AML program should be at least commensurate with the credit union’s level of risk exposure. This includes ongoing risk assessment, sound risk-based member due diligence, appropriate detection and reporting of suspicious activity, and independent program testing. BSA/AML compliance officers should be familiar with guidance by federal functional regulators, self-regulating organizations, and FinCEN as well.

FinCEN stresses that compliance program testing must be independent. Credit union leadership needs to ensure that the party testing the program (whether external or internal) is independent, qualified, unbiased, and does not have conflicting business interests that may influence the outcome of the compliance program test. Ensuring the integrity and independence of the compliance program testing enables the credit union to locate and take appropriate correct actions to address deficiencies.

Understanding How BSA Reports Are Used
All credit union staff should have an understanding of how information collected through the credit union’s BSA/AML program is used, and the purpose that BSA reports serve. Reporting provides law enforcement with important information that safeguards the nation’s interest, and helps to confront serious threats, both domestic and abroad. Reporting also helps the credit union protect itself and aid law enforcement in protecting the institution from bad actors, including inside threats, frauds, and cyber-related threats.

BSA regulations have the deterrent effect on those who would abuse the financial systems and force illicit actors to behave in ways that expose them to scrutiny. The advisory lists four main ways that financial institutions can inform staff of the how reporting is used:

  1. Serving as tips to initiate investigations;
  2. Expanding existing investigations;
  3. Promoting international information exchange; and
  4. Identifying significant relationships, trends and actors

Complying with ever-increasing regulations is a top concern for credit unions. Cornerstone Credit Union League has developed a comprehensive suite of dues-supported services to help credit unions navigate the regulatory landscape. Learn more here.