Compliance Alphabet Soup

by Shannon Truax, Bankers Professional Services, Inc.

What You Should Know About BSA/AML/CFT and What is With All of the New Acronyms?

The Anti Money Laundering (AML) Act of 2020 has brought some changes to what we have historically known as the Bank Secrecy Act (BSA). Many regulatory agencies, including the Financial Crimes Enforcement Network (FinCEN), are now using the terms AML/CFT (Countering the Financing of Terrorism) instead of BSA/AML to better align with the AML Act of 2020. Reference to the BSA is not being replaced, only enhanced. The Federal Financial Institution Examination Council (FFIEC) continues to provide the electronic versions of the “BSA/AML” manual and examination procedures. 

In recent years, we have seen some other new acronyms arise such as replacing Privately Owned ATM (POATM) with Independently Owned ATM (IOATM) and Non-Government Organizations (NGO) with Non-Profit Organizations (NPO). These are just changes to the labels. The risk-based requirements have not changed. 

With the FinCEN BOI Page Up and Running, Can Banks Stop Asking for Beneficial Ownership Information Yet?

One change that we are seeing and need to take note of is regarding Beneficial Ownership Information (BOI). Pursuant to the Corporate Transparency Act (CTA), FinCEN previously issued a final “Reporting Rule”  effective January 1, 2024 which requires certain corporations, LLCs, and other entities to report information on their beneficial owners to FinCEN utilizing a secure database. The CTA’s next step was the “Access Rule.” This final rule, effective February 20, 2024, created circumstances in which beneficial ownership information is disclosed to authorized recipients. It also laid out the plans for protection of the data. The final step that financial institutions are waiting on will revise current Customer Due Diligence (CDD) requirements. This long-awaited rule will bring the current CDD rules into conformity with the AML Act of 2020 and the CTA. It will also account for a financial institution’s access to the FinCEN BOI database and reduce any burdens on financial institutions and legal entity customers that are unnecessary or duplicative of the CTA. Unfortunately, we do not have a timeline for the third rule yet. For more information see 

How to Ensure a Successful BSA/AML/CFT Audit or Exam – Cool Tips and Hot Topics:

Exams and external audits always go better if there is an organized auditor/examiner and an organized client. Keeping things organized on both ends will be key in adhering to the anticipated timeline. Make sure to schedule or attend meetings throughout the process to discuss potential problems or to gain clarity. If an auditor or examiner seems to inquire about processes that do not seem entirely relevant to the audit, they are trying to understand the operational processes to conduct a thorough audit or exam. 

Some hot issues involve Cannabis Related Businesses (CRB) and Money Service Businesses (MSB). If your bank has clients in either category, make sure you are following Enhanced Due Diligence (EDD) and that your customers are properly risk-weighted, and you are maintaining required documentation. Another hot topic is Currency Transaction Reports (CTR) and Suspicious Activity Reports (SAR) and ensuring that they are carefully reviewed for any technical reporting information. Although both forms have fields that are asterisked as “critical” fields for technical filing purposes, banks should provide the most complete filing information available regardless of whether or not the fields are deemed critical. The filing timeline requirement of both CTRs and SARs is very important.  Lastly, Automated Surveillance Monitoring (ASM) is becoming more widely used and banks should ensure they also have enough staff to manage the alerts and are periodically reviewing, testing, and tweaking the alerts and scenarios. Documentation of ASM reviews and changes should be retained. 

Some tips to help guide you through an exam or audit is to check your policies and risk assessments prior to an exam or audit to ensure that any changes within the regulations or the Bank’s processes or products are addressed.  Additionally, ensuring that your Board of Directors stays informed with any developments or deficiencies within the BSA/AML/CFT program. Lastly, be open to auditor feedback since they have the opportunity to read more external audits and peer state and federal examination reports. Do not be afraid to push back though if a finding seems to be unfair or cannot be supported.