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The importance of Bank Secrecy Act training

Nov 21, 2022

Bank Secrecy Act (BSA) training is a pillar of BSA regulation. The Federal Financial Institutions Examination Council (FFIEC) manual indicates that training should be periodic; however, it doesn’t define what “periodic” means. Regulators have generally interpreted this to mean annual training.

Many times, regulators have taken the position that BSA-mandated training should be ongoing, with no more than 12 months since the last training. What regulators have found unacceptable is calendar-year training coupled with training sessions 23 months apart (January 2021 and December 2022, for example). That timing does not meet the regulators’ expectations of ongoing training.

What should be included in your training content

Should the content be the same for everyone? Generally, no. There are some BSA topics that everyone should be exposed to — for example, suspicious activity. Suspicious activity can occur anywhere, inside or outside the financial institution, and personnel need to be able to recognize it and their responsibilities in relation to it.

Consider the case of a credit union member who sold their house and was having their attorney send the sales proceeds in weekly checks to avoid “being on those government forms.” Board members who become aware of such an improper transaction may not realize that it should be reported to your BSA officer through a Suspicious Activity Report (SAR) due to the structuring to avoid reporting (although, since no cash was involved, there would not need to be a Currency Transaction Report [CTR]).

A lapse in basic BSA training can lead to situations like this.

After the basics of BSA, many operational areas within a financial institution also have their own nuances and requirements, and folks in those areas need to be aware of those specifics.

For example, a board member needs to be aware of BSA requirements in a high-level sense, but doesn’t necessarily need training on how to complete a CTR. Similarly, a loan interviewer who does not handle cash also does not need CTR training. Cash handlers, though, do need to be trained on how to complete all necessary forms (including CTRs).

Training should include both generic BSA topics and those specific to your financial institution. Your financial institution’s policies, procedures and practices should be covered.

BSA officers, and their backups, require more specialized training to allow them to effectively oversee your BSA program. This includes staying abreast of current trends and areas of concern, such as marijuana banking and beneficial ownership concerns.

Current staffing challenges across the country have brought training issues to the forefront. If your financial institution’s BSA officer leaves, your backup must be able to immediately step in and ensure ongoing compliance. Fines and penalties for noncompliance with BSA and anti-money laundering are generally large, often reaching millions of dollars.

The need for proper records

The training provided should be documented. Evidence of content, attendees and timing should be maintained, as regulators often request those records.

Your financial institution must also have a method of following up on individuals who miss training. When makeup training is completed, that too must be documented.

As a pillar of BSA regulation, it is critical for your financial institution to be aware of training issues and address concerns efficiently and effectively to help avoid potential regulatory action and penalties. Robust training, follow-up and diligent recordkeeping are critical to documenting your institution’s compliance with BSA.

How Wipfli can help

Wipfli specialists can work with your financial institution so that you can feel confident in your compliance. An evaluation of your training protocols as required by the BSA can help ensure that you are not in breach of any requirements. Contact us to learn more.

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Author(s)

Michael P. Moreau, CIA, CFE, CFSA
Manager
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