BSA-AML Examiner School eBook

Examination Conclusions and Comments (Continued)

Bank Secrecy Act The bank is subject to numerous BSA-related provisions in the Consent Order due to the deficient BSA/Anti Money Laundering (AML) compliance program identified at the May 2014 risk management examination. While it appears that some efforts had been made to address the BSA deficiencies as of the prior examination, the findings of this examination indicate that oversight of this area has significantly deteriorated. As a result, the BSA/ AML program and compliance with related laws and regulations is inadequate. The BSA/AML compliance program does not provide for a system of internal controls to ensure ongoing compliance with BSA/AML laws and regulations. Former, Board-approved BSA Officer lacked the appropriate qualifications, was not properly overseen, and did not fulfill the Board's expectations of the position, which contributed to an inadequate BSA/ AML compliance program. Furthermore, the Board and management failed to comply with the BSA-related provisions of the Consent Order. Former BSA Officer, the Board, and senior management failed to implement corrective action for the deficiencies identified at the December 2015 BSA Independent Review. The BSA training program is inadequate and ineffective, as the Board and senior management have not ensured that employees with BSA duties have received adequate training. As a result of the lack of training, numerous deficiencies were identified with the Customer Identification Program (CIP), Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD), suspicious activity monitoring and reporting, and recordkeeping requirements of sales of monetary instruments. Refer to the Bank Secrecy Act Assessment pages for additional information. Apparent violations of five sections of Part 326 of the FDIC Rules and Regulations are cited due to the weaknesses in the system of internal controls, training program, CIP, overall compliance with the BSA, and the BSA Officer's failure to oversee the program appropriately. Apparent violations of two sections of Part 353 of the FDIC Rules and Regulations are cited for failing to file Suspicious Activity Reports (SAR). Additionally, apparent violations of five sections of the Treasury Department's Financial Crimes Enforcement Network (FinCEN) 31 CFR Chapter X are cited due to weaknesses in obtaining customer information prior to account opening, failure to maintain minimum recordkeeping requirements under the CIP, failure to keep CIP records for required timeframes, failure to maintain records of sales of monetary instruments, and failure to search records upon receiving a request from FinCEN. Refer to the Violations of Laws and Regulations pages for additional information. CEO terminated BSA Officer when it became apparent that she was unable to adequately perform her role as BSA Officer. BSA Officer was assigned these duties before CEO was hired. CEO stated that back-up BSA Officer and Compliance Officer has assumed BSA Officer duties and will receive appropriate training to ensure her success. CEO also stated that Compliance Officer will receive assistance from Operations Officer, as well as from Head Teller.

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