BSA-AML Examiner School Case Study eBook

Internal Use Only

Please review the prior exam comment below.

The following will give you a little history with this institution and their BSA program.

The Bank has remained an overall composite 2 rating, for the last 3 examinations. Prior BSA examinations have been Satisfactory. The most recent examination dated 7/11/2022 ratings were 2-2-2-2-2-2/2. Prior MRBAs noted at the 2020 examination were considered closed, however three new MRBAs were outlined in the 2022 Report. The MRBAs were due to Credit Risk-Commercial Real Estate Portfolio Management, Liquidity Risk Management – Contingency Funding Plan, and Operational Risk Management – Internal Controls Practices. The Operational Risk Management MRBA is detailed below. Operational Risk Management – Internal Controls Practices • The board and senior management are required to formalize the current schedule for internal control testing to enhance oversight and independent review by the board with an overall emphasis placed on fully documenting routine testing of current internal control practices, findings and resolution tracking, and periodic independent reporting to the board. Consideration should be given to the sound risk management principles outlined in SR Letter 03-5, Amended Interagency Guidance on the Internal Audit Function and its Outsourcing , to assist with this matter. Bank Secrecy Act/Anti-Money Laundering (AML) Compliance Program The BSA/AML compliance program is satisfactory and is designed to adequately mitigate and manage risks associated with money laundering, terrorist financing, and other illicit activity. The bank satisfactorily maintains the four pillars of a sound BSA compliance program which includes an adequate Customer Identification Program. The program also includes an established customer due diligence and Beneficial Ownership function. BSA Officer Donna Dewitt possesses a satisfactory level of knowledge, experience, and authority to effectively manage the BSA/AML program. The training program is adequate and includes continual training for employees, including new hires, and annual training for board members. An independent test is conducted every 12-18 months with the most recent test conducted in February 2022 by Compliance Compliance, Mitchell, South Dakota. The scope of the review and testing performance is adequate and aligns with guidelines outlined in the FFIEC’s BSA/AML Examination Manual. No violations noted. Again, thank you for helping out with this examination. With the departure of the former BSA Officer Dewitt the BSA Officer Rose oversees the BSA/AML compliance program currently for the community bank side and the BaaS program. The new BSA Officer’s resume noted that she was from a bank on the east coast. I am a little concerned that upon some research I learned that in May of 2023 that bank she listed on her resume went under a Consent Order due to its BaaS program (for its lending, IT, and BSA programs). She was Director of FinTech for that bank.

For Training Purposes Only

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