November 14, 2023

What Should You Include in Your BSA/AML Compliance Program?

Learn the key components of a BSA/AML program: risk assessment, policies, officer roles, training, audits, CDD/EDD, SARs, and record-keeping.

In today's financial landscape, the importance of a robust Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program cannot be overstated. With regulatory scrutiny intensifying and the cost of non-compliance soaring, financial institutions must ensure their BSA/AML programs are comprehensive, up-to-date, and effective in mitigating risks. Here's what you should include in your BSA/AML compliance program to protect your institution and its customers.

1. Risk Assessment

- Conduct a thorough risk assessment of your company's exposure to money laundering and terrorist financing threats. Consider factors such as customer types, product offerings, geographies served, and transaction volumes.
- Use the risk assessment to tailor your BSA/AML program, focusing resources and controls on the highest-risk areas.

2. Policies, Procedures, and Controls

- Develop clear, written policies that reflect your commitment to compliance and outline the specific measures your institution will take to prevent, detect, and report suspicious activities.
- Implement procedures and controls that operationalise your policies. These should include processes for customer due diligence, transaction monitoring, ongoing screening, and employee due diligence.

3. Compliance Officer

- Appoint a dedicated BSA/AML Compliance Officer with the authority and resources to enforce policies and procedures throughout the organisation.
- Ensure the Compliance Officer has access to all necessary information to monitor compliance effectively.

4. Training Program

- Implement a comprehensive training program for all employees, regardless of their position. Training should cover the laws and regulations related to BSA/AML, as well as your institution's specific policies and procedures.
- Regularly update training materials and sessions to reflect changes in legislation, regulatory guidance, and emerging threats.

5. Independent Testing

- Schedule regular, independent audits of your BSA/AML program to assess its effectiveness and compliance with relevant laws and regulations.
- Use audit findings to make necessary adjustments to policies, procedures, and controls.

6. Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD)

- Implement a CDD program to verify the identity of your customers, understand the nature of their businesses, and assess their risk profiles.
- For higher-risk customers, apply EDD measures, such as obtaining additional information on the purpose of an account, the source of funds, and the customer’s public profile.

7. Suspicious Activity Reporting (SAR)

- Develop a process for identifying, investigating, and reporting suspicious activities in compliance with SAR regulations.
- Ensure all employees are aware of their responsibilities in detecting and reporting suspicious activities.

8. Record Keeping

- Maintain comprehensive records of all financial transactions, customer identification documents, and compliance efforts for the period specified by BSA/AML regulations.
- Implement secure, efficient systems for storing and retrieving records as needed for examination purposes or in response to law enforcement requests.

An effective BSA/AML compliance program is essential for financial institutions to navigate the complex regulatory environment and protect against financial crimes. By incorporating these elements into your program, you can strengthen your compliance posture, reduce the risk of regulatory penalties, and contribute to the global fight against money laundering and terrorist financing.

If the process of creating or updating your BSA/AML compliance program seems daunting, AML Checked can offer the expertise and support you need. With a comprehensive suite of tools and services tailored to BSA/AML compliance, AML Checked can help you develop, implement, and maintain a robust BSA/AML compliance program that not only meets but exceeds regulatory expectations.

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