RISK ASSESSMENT IS THE BSA KEY Your bank has an opportunity to frame your next Bank Secrecy Act/Anti-Money Laundering/Countering the Financing of Terrorism (BSA/AML/CFT) examination, much as you do your Community Reinvestment Act (CRA) exam, by preparing a summary of the “performance context” within which you operate. The agencies state that a well-developed BSA/AML/CFT risk assessment assists the bank in identifying money laundering, terrorist financing and other illicit financial activity risks and in developing appropriate internal controls — policies, procedures and processes. Understanding its risk profile enables the bank to better apply appropriate risk management processes to the BSA/ AML/CFT compliance program to mitigate and manage risk and comply with BSA regulatory requirements. The BSA/AML/CFT risk assessment process also enables the bank to better identify and mitigate any gaps in controls. Risk-Focused Exam Process The interagency examination procedures provide that the extent of BSA/AML/CFT examination activities necessary to assess the bank generally depends on the bank’s risk profile and the quality of risk management processes to identify, measure, monitor and control risks, as well as to report potential money laundering, terrorist financing and other illicit financial activity. Given that banks vary in size, complexity and organizational structure, the agencies acknowledge that each bank has a unique risk profile, and the scope of a BSA/AML/CFT examination varies by bank. The first step in a BSA/AML/CFT examination is a scoping and planning process. At this preliminary stage of the activity, examiners analyze existing information about the bank — off-site monitoring information, previous examination reports and workpapers, BSA-reporting databases, other communications with the bank, and independent reviews or audits. Examiners also scrutinize request letter items completed by bank management and, perhaps most important in some ways, the bank’s BSA/AML/ CFT risk assessment. BSA examiners are charged with determining the BSA/AML/ CFT risk profile of the bank as a part of the scoping and planning process. The preferred method for accomplishing this goal By WILLIAM J. SHOWALTER, CRCM, CRP, Senior Consultant, Young & Associates Inc. 14 In Touch
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