2020 Journal of Community Bank Studies

2020 COMMUNITY BANK CASE STUDY COMPETITION

are informal meetings between banks, credit unions, and law enforcement held every two to three months where these groups can discuss current fraud trends, Suspicious Activity Reports (SAR), and changes to legislation and regulations. 3.4 BSA-Related Interactions Our team interviewed a Capitol Hill staffer working on the Illicit Cash Act , a revision to the current Bank Secrecy Act . The Illicit Cash Act hopes to reduce the cost of BSA compliance by allowing for more innovative, cost-efficient processes for all financial institutions while improving the communication between the finance and law enforcement worlds. Much of our conversation with the Capitol Hill staff member revolved around the disconnect between banks, law enforcement, and federal agencies on the level of attention provided to suspicious activity reports (SARs). Through their background research for the Illicit Cash Act , Capitol Hill found that the individuals submitting SARs were often the individuals following up on these reports. This was believed to be the role of law enforcement, which was not responding in the timely manner the financial world had anticipated. Despite a poor response rate on SARs, law enforcement continues to reassure financial institutions that the more information they receive the better. Another complaint of financial institutions is the concept of a “Defensive SAR.” A “Defensive SAR” is a report that may not have been warranted due to gray area content or a regulatory hot topic such as digital currency

F&M Bank does not directly collaborate with any other banks or financial institutions on BSA reform.

kiting could be prevented. Cash structuring is the act of withdrawing cash on numerous occasions in a limited period to avoid the attention that withdrawing a larger sum of cash would garner. The use of better software could eliminate this issue by keeping a running total of withdrawals over a set period as opposed to tracking individual transactions. Signature matching is going through the digital copies of deposited checks to match the signature on those checks to the signature upon opening the account. The manual workload of F&M’s compliance team would be significantly smaller if F&M’s BSA compliance software could reduce some of the labor required to identify these common issues. 3.3 Collaboration F&M Bank does not directly collaborate with any other banks or financial institutions on BSA reform. The primary source of collaboration with other community banks is roundtable meetings. As described in Section 2.5, these

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