2020 Journal of Community Bank Studies

SECOND PLACE: James Madison University

the BSA compliance processes and cutting costs for all financial institutions. 3.2 F&M’s Use of New and Existing Technology The current platform that F&M Bank uses is YellowHammer Fraud Detection, which is a program provided by Jack Henry & Associates. Jack Henry & Associates advertises YellowHammer as a program that fully automates and centralizes compliance with the Bank Secrecy Act . It does this by providing “data monitoring, recordkeeping, and reporting to eliminate the time-consuming and error-prone manual compliance process and mitigates the risks associated with BSA compliance” (“YellowHammer”). YellowHammer assists F&M Bank by reviewing transactions and assigning transactions a risk score. This helps the team direct their attention to transactions YellowHammer include transactions eclipsing $5,000 and any suspicious activity within a peer group. Other transactions are automatically flagged, such as charity and non-profit transactions, and cryptocurrency exchanges above $1,000. The team does not manually review any transactions that are under $5,000 or that have a YellowHammer risk score of less than 50%. However, transactions below the $5,000 threshold with a risk score greater than 50% are reviewed. A team member who has been with F&M for three years has yet to see a noticeable change in the YellowHammer system. While there have been several minor updates to the software, the more likely to violate BSA standards. Transactions automatically flagged by

YellowHammer assists F&M Bank by reviewing transactions and assigning transactions a risk score.

software seemed slow and outdated in observation. However, during our meeting with the BSA operations team, the team stated that they were satisfied with the software overall. Other banks agree that the software provides greater efficiency (Rodriguez). The main problems discussed were the speed of the software and the workload that comes with two people examining $800 million of assets. The BSA compliance team at F&M believes that better software could help the team solve the common issues of kiting, cash structuring, and signature matching. Current software can assist in identifying these common issues, but this identification requires the BSA team to manually review transactions. As defined in Section 2.4, kiting occurs when a person has multiple checking accounts with different banks and takes advantage of unprocessed funds or “float” by moving it back and forth (Walsh). If the software could allow multiple financial institutions to share transactional information,

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