Major BSA Penalty Assessed Against Bank. Will Your Credit Union Be Next?
June 4, 2010
June 15, 2010
The announcement from the Financial Crimes Enforcement Network of a $1,000,000 penalty assessed against Pamrapo Savings for Bank Secrecy Act violations marks a renewed focus on BSA compliance in examinations. Pamrapo was cited with a “lack of internal controls combined with unqualified BSA compliance personnel, relatively non-existent training and deficient independent testing…”
Both the NCUA and DFI have stated that regulatory compliance will be a major focus in upcoming examinations. The time to review your BSA program to make sure it will pass examination in now. It is too late when the person who goes by the title “Examiner-in-Charge” shows up at your front door.
What are the examiners looking for?
Direct from the NCUA Examiner’s Guide, the examiners will be looking to ensure that your credit union has appropriate BSA policies, procedures, and controls including your CIP, CTR, SAR and OFAC programs. And of course, you’ll need to maintain proper records for all of them. The examiners will also be looking for various risk indicators that could lead to compliance, strategic, or reputational risk for the credit union.
Violations of BSA necessitate immediate corrective action. Failure of a credit union to take immediate and effective corrective action may warrant administrative action. Examiners must document BSA violations and compliance deficiencies on the Consumer Compliance Violation Form.
Customer (or Member) Information Program
Generally, this requirement asks you to be sure your members are who they say they are. To meet the requirements you’ll need to examine and verify your member’s identification documents and determine whether or not that member is on any list of known or suspected terrorists. And of course, keep documentation of your efforts.
Currency and Transaction Reports
Credit unions must file a CTR each time a member makes a deposit, withdrawal, exchange, or other transfer of more than $10,000 in currency in one day.
Suspicious Activity Reports
Credit unions must file a SAR to report all known or suspected criminal offenses, including transactions involving possible money laundering or violations of the BSA.
Maintaining Proper Documentation
Records required by the BSA need to be retained for at least five years and access provided to legal authority within a reasonable time period. Your procedures should document the types other documents you are also required to gather.
Office of Foreign Assets Control
Although there is no specific requirement that exists for a policy on compliance with OFAC regulations, credit unions must comply with the regulations. Credit unions may include complying with OFAC regulations as part of their overall BSA compliance policy.
As part of OFAC compliance you must verify your members against the OFAC SDN list at account opening and periodically to ensure they have not been added to the list. Credit unions must block or freeze the assets, funds transfers, and all transactions of all designated countries and their agents, specially designated terrorists, foreign terrorist organizations, specially designated narcotics traffickers and blocked persons.
For more information
Appendix 18A of the NCUA Examiner’s Guide contains further details of what the examiners will be looking for when you next have the pleasure of their company.