BSA recordkeeping and reporting requirements are continually changing. The FFIEC BSA/AML Examination Manual was enhanced in 2010, and again in 2014. Since 2014, guidance has been issued regarding new and emerging BSA concerns, beneficial ownership rules have been put in place, and the CTR and SAR forms have undergone changes.
When guidance, rules, and form changes occur, the BSA Officer, or designee, should be reviewing the information issued by federal regulators, FinCEN, and other governmental agencies, as well as determining whether changes to policy or procedures are needed, and ensuring appropriate staff are trained. In addition, the BSA Officer should be determining whether executive management, the board of directors, and/or the board committee should also be trained.
Suspicious Activity Report (SAR) Changes
FinCEN SAR changes defined in the Federal Register notice posted February 2, 2017, will be available on the BSA E-Filing System in June of 2018. The following is a list of the changes to the FinCEN SAR:
- New text field to alert FinCEN that the SAR is being filed in response to a current specific geographic targeting order (GTO), advisory, or other activity.
- New “Cyber event” suspicious activity type category.
- New or modified suspicious activity subtype selections.
- New text fields to record the date and/or timestamp of the first instance of the reported IP address.
- New category of fields to record up to 99 cyber events associated with the suspicious activity. These fields will include the event type, event value, date, and timestamp. Associated supporting information should be provided with the SAR.
- New product type selections involved in the suspicious activity include Deposit accounts and Microcap securities.
- New subtype selections associated with the type of securities and futures institution in Part III and Part IV.
The online form with the new and updated fields will be available to discrete filers in June 2018. Batch filers will have until January 1, 2019, to adhere to the new XML filing specifications. Until then, the BSA E-Filing System will continue to accept ASCII-based batch files.
Currency Transaction Report (CTR) Changes
FinCEN CTR changes defined in the Federal Register notice posted February 20, 2016, was available on the BSA E-Filing System in August 2017. The following is a list of the changes to the FinCEN CTR:
- Renamed Item 2d from “Courier Service (private)” to “Common Carrier” in Part I (Person Involved in Transaction).
- Added a checkbox for “Shared Branching” to Item 24 Part II (Amount and Type of Transaction).
- Added an Unknown option to Item 29 (Primary Federal Regulator), and Unknown checkbox to Item 32 (EIN) in Part III (Transaction Location).
- Added Item 37 (Country), Item 41 (Cash in amount for transaction location), and Item 42 (Cash out amount for transaction location in Part III (Transaction Location)).
- Added new Part IV (Filing Institution Contact Information) section to collect data about the institution that filed the CTR.
The online form with the new and updated fields was available to discrete filers in August 2017. Batch filers had until May 1, 2018, to adhere to the new XML filing specifications.
Frequently Asked Questions Regarding Customer Due Diligence Requirements for Financial Institutions (FIN-2018-G001 and 2016-G003)
On April 3, 2018, and July 19, 2016, FinCEN issued FAQs to assist covered financial institutions in understanding the scope of the “Customer Due Diligence Requirements for Financial Institutions,” published on May 11, 2016, as amended on September 29, 2017. The FAQs provide interpretive guidance with respect to this rule. The FAQs are a valuable resource to financial institutions when implementing and making changes to their beneficial ownership procedures.
Interagency Guidance to Issuing Banks on Applying Customer Identification Program Requirements to Prepaid Cards (Joint Release by federal financial institution regulatory agencies)
On March 21, 2016, guidance was issued clarifying the applicability of the Customer Identification Program (CIP) rule to prepaid cards issued by financial institutions. Financial institutions that issue prepaid cards and process prepaid card transactions should implement strong and effective mitigating controls, such as limits on card values, frequency of transfers, amount of transfers, and appropriate due diligence on third parties and cardholders. Certain prepaid cards issued by a financial institution should be subject to the financial institution’s CIP. The guidance includes information to assist financial institutions in determining whether the prepaid card constitutes the existence of an “Account,” identifying the customer for purposes of the CIP rule, and reviewing contracts with third-party program managers.
BSA Expectations Regarding Marijuana-Related Businesses (FIN-2014-G001)
On February 14, 2014, FinCEN issued guidance to clarify BSA expectations for financial institutions seeking to provide services to marijuana-related businesses. The guidance includes factors used in deciding to open, close, or refuse any particular account or relationship, assessing risk of providing services to marijuana-related businesses, filing SARs on marijuana-related businesses, and recognizing red flags to distinguish when to file priority SARs, CTRs, and FinCEN Form 8300 (Report of Cash Payments Over $10,000 Received in a Trade or Business). Since the January 2018 Department of Justice rescission of the Cole memo, FinCEN has not made any changes to its marijuana-related business guidance…yet.
Staying on top of continuous change is an integral part of being a BSA Officer, a member of management, and a board member. By understanding the changes, adopting and implementing or enhancing comprehensive policies, procedures, and processes will be easier.