Compliance: FinCEN statement on risk-focused BSA/AML supervision
Federal financial regulators, along with the Treasury’s Financial Crimes Enforcement Network (FinCEN), have issued a statement on risk-focused Bank Secrecy Act/Anti-Money Laundering (BSA/AML) supervision. The statement does not include any new requirements but is intended to improve transparency into the risk-focused approach used for planning and performing BSA/AML examinations.
BSA/AML compliance programs should be risk-based and designed to identify and report potential money laundering, terrorist financing, and other illicit financial activity.
Federal regulators conduct risk-focused BSA/AML examinations and tailor examination plans and procedures based on the risk profile of each institution.
Common practices for assessing a risk profile include:
- Leveraging available information, including the bank’s BSA/AML risk assessment, independent testing or audits, analyses and conclusions from previous examinations, and other information available through the off-site monitoring process or a request letter to the institution;
- Contacting financial institutions between examinations or prior to finalizing the scope of an examination, and
- Considering the institution’s ability to identify, measure, monitor and control risks.
The information gained assists examiners in scoping and planning the examination and initially evaluating the adequacy of the BSA/AML compliance program. Regulators generally allocate more resources to higher-risk areas, and fewer resources to lower-risk areas.