FFIEC Releases 2014 Version of BSA Examination Manual

The Federal Financial Institutions Examination Council (FFIEC) released the 2014 version of the Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual. The revised manual provides current guidance on risk-based policies, procedures and processes for credit unions to comply with the BSA and safeguard operations from money laundering and terrorist financing. The 2014 version further clarifies supervisory expectations and regulatory changes since the last update of the manual in 2010.

Revisions were made throughout the manual. The sections with more significant revisions are noted in the table of contents with “2014.” Significant updates include:

  • Suspicious Activity Reporting (SAR) – Incorporated new SAR E-Filing requirements; guidance on the extension of SAR filing for continuing activity; clarification of prohibitions on disclosing a SAR; and guidance on sharing SARs with affiliates.
  • Currency Transaction Reporting (CTR) – Revised to incorporate new CTR E-Filing requirements and new guidance issued by FinCEN since 2010 related to currency transaction aggregation for businesses and exemptions.
  • Foreign Correspondent Account Recordkeeping – Included regulations relating to the Comprehensive Iran Sanctions, Accountability, and Divestment Act.
  • Appendix T: BSA E-Filing System – Created to provide examiners with information on the FinCEN BSA E-Filing System.
  • Foreign Bank and Financial Accounts (FBAR) – Incorporated new FBAR filing requirements.
  • International Transportation of Currency or Monetary Instruments Reporting (CMIR) – Clarified monitoring and reporting obligations under the BSA for international transportation of currency or monetary instruments.
  • Correspondent Accounts (Foreign) – Included additional guidance in the section on risk mitigation.
  • Bulk Shipments of Currency – Revised to incorporate FinCEN’s CMIR guidance for common carriers of currency, including armored car services (August 1, 2014), and clarify monitoring and reporting obligations under the BSA.
  • Automated Clearing House Transactions (ACH) – Incorporated National Automated Clearing House Association (NACHA)-The Electronic Payments Association modifications related to international ACH transactions and further defined third-party service providers.
  • Prepaid Access – Replaced Electronic Cash section and included an expanded discussion of risk factors and risk mitigation related to prepaid access.
  • Third-Party Payment Processors – Updated to reflect interagency guidance issued since 2010.
  • Embassy, Foreign Consulate, and Foreign Mission Accounts – Updated to incorporate the interagency guidance on accepting accounts from foreign embassies, consulates, and missions.
  • Nonbank Financial Institutions – Incorporated new FinCEN regulations for Money Services Businesses (MSBs) related to certain foreign-located persons engaging in MSB activities; new regulations related to prepaid access programs; and guidance regarding virtual currency administrators and exchangers.

Compliance Question of the Week

What policies are we required to have and which ones need to be approved by the Board of Directors?           

The listed policies should be board approved and reviewed once a year with documentation in the board minutes.

Required Policies—per NCUA AIRES checklists:

  • Bank Secrecy Act
  • General Lending—Real Estate Lending (including appraisals), Indirect Lending, Business Lending, Agricultural Lending, Construction Lending, Credit Cards
  • Member Business Lending
  • Loan Participations
  • Allowance for Loan and Lease Loss
  • Liquidity Management
  • Privacy
  • Fair Housing
  • Office of Foreign Asset Controls (OFAC)
  • Overdraft
  • Investments
  • Truth in Savings Act (TISA)
  • Consumer Reports—Address Discrepancies, Records Disposal
  • General Information Systems and Technology
  • Personnel—the only mention of this is in the IT Policy requirements
  • Plans, Programs, Other
    • Disaster Recovery Plan
    • Security Program
    • Records Preservation
    • Vendor Due Diligence
  • Unlawful Internet Gambling Enforcement Act
  • Risk Based Pricing Notices
  • Red Flags
  • Interest Rate Risk (for credit unions over $50 million, or those between $10 and $50 million with exposure to IRR)
  • Loan Workout
  • Loan Non-accrual

The other policies that you have may not need annual board review, but it is a best practice to regularly review your policies and procedures to ensure that they are current. 

Related Links:

Legal Briefs

National Credit Union Administration (NCUA)

The NCUA announced that the credit union system experienced its highest loan growth since 2006.

The NCUA has made its December 11, 2014 Board Meeting agenda available.

Consumer Financial Protection Bureau (CFPB)

CFPB Director Richard Cordray delivered prepared remarks at the Columbus Metropolitan Library. Cordray’s remarks focuses on the partnership that the CFPB is building with libraries to help offer financial education information to consumers.

Department of Housing and Urban Development (HUD)

HUD issued Mortgagee Letter 2014-25 which provides loan limit instructions for streamline refinance transactions without an appraisal.

HUD, along with the Treasury, announced enhancements to programs under Making Home Affordable to assist homeowners which will provide greater relief to struggling homeowners.

Department of Defense (DoD)

The Department of Defense has extended its comment deadline for the Military Lending Act amendments to December 26, 2014.

Federal Financial Institutions Examination Council (FFIEC)

The FFIEC released its HMDA edits and file specifications for 2015.

The FFIEC has released its revised BSA/AML Examination Manual.

Federal Reserve Board (FRB)

The FRB issued the October Consumer Credit report.

The newest edition of the FRB’s FedFocus has been released.

The FRB has released the December 3rd update of the Beige Book.

The FRB released its board meeting notice for its December 9, 2014 open board meeting.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of November 26, 2014. The last update prior to this was November 19, 2014.

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance, NCUA.