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Bank Secrecy Act compliance – Who’s job is it anyway?

Aug 27, 2020

Responsibility for Bank Secrecy Act (BSA) compliance falls to the Board of Directors, senior management, BSA Officer and the employees of the financial institution. 

Each area is vital in the detection and prevention of money laundering and other suspicious or illegal acts, but not everyone plays the same role in the process. Let’s look at a breakdown of some of the responsibilities for each area.   

Board of directors

The tone of the BSA program starts with the board of directors, which is charged with the overall responsibility for oversight of the BSA program. The members should have a knowledge of the organization’s business model and risk tolerance, and must understand BSA/AML/OFAC risks and the five pillars of BSA. 

It is important for the board to demonstrate and communicate its commitment to compliance so that the overall tone of the program is set from the top. Active engagement from the board regarding the overall BSA Compliance program is key. This would include identifying any potential weakness or gaps within the program, working to ensure that issues noted in exams or audits have been corrected, and allotting for additional resources to resolve any deficiencies, when needed. 

In addition to understanding the five pillars of BSA, the board must also have a high-level knowledge of BSA/AML risks, policies and procedures of the organization, as well as suspicious activity reporting efforts. To assist them in their oversight role, these individuals should have regular training related to their responsibilities and an understanding of the importance of a robust training program. 

Senior management

Senior management plays a key role in the institutions BSA/AML Compliance Program as well. Just as it is important for the board of directors to have knowledge in BSA-related areas, it’s vital for senior management to have that same knowledge.

Management should communicate their commitment to the program to the staff to convey the importance of efforts of the BSA officer and management. It is also critical that senior management allot adequate resources to the BSA officer and staff in order to effectively manage the program. 

BSA officer

The day-to-day coordination and monitoring of the BSA/AML compliance program rests on the shoulders of the BSA officer. It goes without saying that the BSA officer must have a strong knowledge in the organizations business model, risk tolerance and the five pillars of the Bank Secrecy Act. 

This person should be detail-oriented, thorough and adaptable to change as regulatory expectations and risks evolve. 

The BSA officer is responsible for overseeing high-risk areas, such as: Customer Identification Program (CIP); Customer Due Diligence (CDD), Enhanced Due Diligence (EDD) and Beneficial Ownership; currency transaction reports (CTRs); suspicious activity reports (SARs); wire transfers; monetary instrument sales for cash; high risk customers; and regulatory reporting, just to name a few. 

This individual is charged with the task of coordinating with examiners and auditors and for follow up to any findings that may arise from those exams or audits. The implementation of a BSA training program for all employees within the organization, as well as the board of directors, typically falls within the BSA officer’s purview. 

Risk rating of customers, to assist in monitoring, is another area that generally falls to the BSA officer The development of policies and procedures, as well as the financial institutions BSA risk assessment are other key functions of the BSA officer.

Staff

The organization’s staff plays a critical role in the success of the institution’s program. 

Staff, particularly those with customer-interaction positions, are the first line of defense in detecting suspicious activity. Staff should understand the importance of the program, and how to identify and report any potential suspicious activity. The institution’s staff must  receive training — both overall and job-focused — in order to increase their knowledge about the Bank Secrecy Act and more importantly, to help facilitate the success of the program. 

Working together

Each area of a financial institution is a cog in the wheel that keeps the motor running smoothly. All areas play an important role in the institution’s success or failure. 

No one person, or area, is without responsibility and a successful BSA program starts from the top and moves through the entire organization. Just like a motor runs smoother when firing on all cylinders, so does the BSA program when everyone works together. 

How Wipfli can help

Wipfli’s team brings real-world experience to your financial institutions to meets today’s evolving compliance programs. Learn more about our compliance services on our web page or read more of our articles on BSA:

Updates to FFIEC BSA/AML manual

Is your BSA/AML training program adequate?

Can your board do more than spell BSA?

Author(s)

Jennifer Lafferty
Jennifer M. Lafferty
Specialist, Compliance
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