In 2020, Improve Your BSA/AML Program by Focusing on These 4 Areas

As another busy year draws closer to an end, it is time to reflect on the challenges and successes of the year. It is also time to start planning and sharpening the ax for next year.

As BSA officers, we have continuous expectations placed on us to be knowledgeable in all aspects pertaining to Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance. Given the time constraints of our day-to-day operational responsibilities, we need to be selective in how we use spare time to improve our BSA/AML programs and/or enhance our industry knowledge.

In 2020, there are four categories that are particularly important for professional development and enhancing your financial institution’s BSA/AML program:

1. Continuing education

2. Communication

3. Assessing institutional risk

4. Sustainability of the BSA/AML program

Plan BSA/AML continuing education for 2020

Continuing education is critical for BSA/AML compliance professionals. In fact, continuing education or training is one of the pillars for any BSA/AML compliance program. I strongly recommend that if you have not done so already, sign up for a compliance AML certification.

Some of the more prominent certifications that are industry-related are Certified Anti Money Laundering Specialist (CAMS), Certified Fraud Examiner (CFE), Certified AML and Fraud Professional (CAFP), and Certified Regulatory Compliance Manager (CRCM). Aside from giving you “street cred” among the people in the financial institution, these programs will increase your industry knowledge and provide networking opportunities with your peers.

If you already have certifications and need to obtain  continuing education credits, I would focus on the following topics:   cannabis-related businesses , cybersecurity and lending and underwriting. Banks and credit unions will continue to play catch up on assessing and mitigating their risks associated with cannabis until the federal government provides additional clarifying guidance.   Cybersecurity   will remain one of the larger risks posed not only to financial institutions but also to their customers.

Financial institutions will need to continue to devote resources to protect themselves and their customers. AML professionals need to continue to familiarize themselves with these risks. The most recent trend I have been noticing is regulatory lean-in on  lending and underwriting risks   related to BSA and AML programs. This is a big change for us as compliance professionals, as most of us have traditionally had more exposure to the deposit side of the bank. Even if we are less familiar with it, we are expected to identify the AML risk related to credit and mitigate it with the controls we have available to us.

Communicate in 2020 to educate teams and clients

Communication is probably the most critical business element for success. As compliance professionals, many of us are generally not associated with our ability to give memorable speeches. We are, however, great writers as we spend an abundance of time documenting suspicious or non-suspicious activity as well as drafting policies and procedures and responding to audits and exams. We need to use this skill to share our knowledge with our colleagues and our customers.

Educating our teams and clients on the BSA and fraud red flags can mean the difference to a fledgling business surviving an attempted fraud or being used to launder money. These types of positive outreach can have material impacts on your organization. They convey transparency to both internal and external stakeholders. Possible outreach efforts should include advising your customers on how to submit referrals to your financial institution if they feel that there is something suspicious occurring.

Enhance risk assessment efforts in 2020

The third item is also a critical item of focus as BSA officers: assessing risk.  BSA/AML risk assessments  are extremely important to our organizations. They are the starting point in developing our mitigating controls. We need to ask ourselves if the way we have approached these in the past will continue to not only identify all risk factors but will also satisfy regulatory expectations. I would recommend enhancing your risk assessment. Change it up. This could include obtaining additional statistical information and inserting visuals where applicable.

As mentioned above, some regulators have started scrutinizing risk assessments that do not address credit and cyber risks to the organization. You want to make sure that these topics have the appropriate attention paid to them within the risk assessment. Finally, for the above-mentioned reasons, you may want to have someone else perform a risk assessment if you have been the one performing it continuously. This can provide a change of perspective and provide a template to follow going forward.

Ensure BSA program sustainability in 2020

The last item that should receive attention in 2020 has also been surfacing recently: sustainability of BSA/AML programs. Regulators want to ensure that you meet regulatory guidelines for safety and soundness of a financial institution. Some of the  questions BSA examiners may be asking  are:

• Does the bank or credit union have enough skilled employees?

• Is the financial institution still using a manual process or do they use  automation  to manage the program?

• Do they have succession planning in place?

• Is there a culture of compliance?

This year has been busy for BSA/AML professionals, with many regulatory changes and new security threats and trends emerging. Due to the time constraints many BSA/AML professionals face, it’s critical that your financial institution’s program is selective and thoughtful in how it focuses its time in the coming year.

These suggested areas of focus for 2020 should lay a solid foundation to enhance your institution’s BSA/AML program.

Andres Tapia, CAMS, GAMS, CFE, Abrigo