Season greetings, compliance folks! December is already shaping up to be a busy month in terms of Bank Secrecy Act (BSA) updates from the regulatory agencies. Let’s review some recent changes to the BSA landscape:
FFIEC Manual Updates
On December 1, 2021, the Federal Financial Institutions Examination Council (FFIEC) announced changes to their BSA/AML examination manual. The update includes a new section, as well as updates to three existing sections. The FFIEC’s press release states that these updates “should not be interpreted as new requirements or as a new or increased focus on certain areas.”
The new section included in the update is an introduction on customers, which reminds examiners that no specific type of customer “automatically presents a higher risk” of money laundering or terrorist financing (ML/TF) or other illicit financial activity. The section notes that credit unions are not prohibited or discouraged from providing financial services to any class or type of customer. Instead, the FFIEC encourages credit unions to manage and mitigate risks unique to each customer rather than declining to provide services to entire categories of customers. For example, some financial institutions choose not to do business with marijuana related businesses (MRBs) rather than attempting to manage the BSA risks posed by those customers. The new section encourages credit unions to consider if they can manage and mitigate the risks posed by each customer relationship, rather than categorically avoiding entire groups of customers. The manual also states that no particular group or type of customer automatically requires additional customer identification requirements or customer due diligence (CDD) steps. Instead, whether certain customers should be subject to those additional steps will depend on the risk posed by the customer, determined based on gathering information and creating a customer risk profile.
continue reading »