2020 Journal of Community Bank Studies

SECOND PLACE: James Madison University

4.2: Areas for Improvement Another central objective of the Illicit Cash Act is to provide an incentive for large financial institutions to experiment with BSA compliance methods. The testing of BSA compliance methods by large banks could yield an approach that reduces BSA compliance costs for both large and small financial institutions. This bill aims to create a space for large institutions concerning software to monitor BSA compliance (Capitol Hill Staffer). This element of the legislation also anticipates firms will develop an efficient platform for SAR reporting and law enforcement monitoring. The politicians behind the Act believe allowing larger financial institutions to experiment with BSA compliance measures will not create additional expenses for large firms. Further, successful innovation from this measure could pass-down benefits to small financial institutions in the form of lower BSA compliance costs. This allowance would aid in F&M Bank’s desire to acquire new, affordable software to enhance its operational efficiency. 5. Conclusion In this case study, we find that F&M Bank is making the most of its situation regarding Bank Secrecy Act compliance. F&M’s three-person compliance team has remained the same for several years now, and F&M has provided adequate capital and resources for the team to do its job successfully. Changes to the BSA framework could alleviate many regulatory obstacles created by the outdated nature of the Bank Secrecy Act .

In this case study, we find that F&M Bank is making the most of its situation regarding Bank Secrecy Act compliance.

Our case study identifies that the BSA needs reform. Two of our main recommendations are to transfer beneficial ownership liability back to the State Corporation Commission and to update the $10,000 reporting threshold. The newly proposed legislation, the Illicit Cash Act , proposes solutions to those main issues. The issues addressed by the proposed legislation are widespread, and the benefits of the legislation affect F&M, other community banks, as well as larger financial institutions. The primary goal of any community bank is to serve, invest in, and grow its community. Modernization of this regulation allows community banks to better utilize resources, therefore, spending less time on regulatory obstacles and ultimately more time working towards serving, investing, and growing the communities these banks serve.

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