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Financial Services Law Insights and Observations

FFIEC updates BSA/AML examination manual

Agency Rule-Making & Guidance Financial Crimes Bank Secrecy Act Anti-Money Laundering FFIEC Of Interest to Non-US Persons

Agency Rule-Making & Guidance

On April 15, the FFIEC published the updated Bank Secrecy Act/Anti-Money Laundering Examination Manual (Manual). According to an interagency statement, revisions were made throughout the updated sections to incorporate regulatory changes since the Manual was last updated in 2014 and “to ensure language clearly distinguishes between mandatory regulatory requirements and supervisory expectations.” The revisions can be identified by a 2020 date in the table of contents and include:

  • Examiners should tailor Bank Secrecy Act/anti-money laundering (BSA/AML) examinations to a bank’s risk profile.
  • Examiners should assess the adequacy of an institution’s BSA/AML compliance program and risk assessment processes. This includes identifying specific risk categories unique to a bank and analyzing the identified information to asses risks within these categories. The Manual notes, however, that there is no particular format or method for a bank to use for its risk assessment process, and reiterates that risk categories may vary based on a bank’s size, complexity, and organizational structure and that “updates may occur as necessary to align the risk assessment with a significant change in a bank’s risk profile.”
  • Examiners should be mindful that banks have flexibility when designing a BSA/AML compliance program and that “minor weaknesses, deficiencies, and technical violations alone are not indicative of an inadequate program.”

The agencies acknowledge that they “are aware of the uncertainty faced by financial institutions during this unprecedented time” and emphasize that the updated Manual, “which supports tailored examination work, has been in process for an extended period and should not be interpreted as new instructions or as a new or increased focus.” Additional updates to the remaining Manual sections will be released in phases at a later date.

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