Why Won’t BSA/AML Training Just Go Away?!
in Compliance & Regulatory
By: Nicola Foggie, NJCUL Vice President, Compliance and Regulatory Affairs

Almost 50 years ago, concerns about large amounts of cash coming into the country from the drug trade led Congress to pass what’s become known as the Bank Secrecy Act (BSA). The BSA was designed to help identify the source, volume, and movement of currency and other monetary instruments transported or transmitted into or out of the U.S. The Money Laundering Control Act came about in 1986. The training to counter money laundering is more commonly known as Anti-Money Laundering (AML) training.

So, with a little bit of BSA/AML history in mind, back to my original question, why won’t BSA/AML training just go away?

Well, part of the answer can be found in recent actions by the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the U.S. Treasury, is the delegated administrator of the BSA. FinCEN, in turn, entrusts the federal banking agencies with reviewing BSA compliance as part of their regular examination processes.

Earlier this year, FinCEN made its annual inflation adjustment to its civil monetary penalty amounts. News headlines are full of the large institutional fines, but you must remember under various statutes, credit unions and individuals are also subject to criminal and civil liability for violating anti-money laundering and terrorist financing laws. And, these penalties can be severe! The Federal Financial Institutions Examination Council (FFIEC) Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual outlines potential penalties:

"A person convicted of money laundering can face up to 20 years in prison and a fine of up to $500,000. Any property involved in a transaction or traceable to the proceeds of the criminal activity, including property such as loan collateral, personal property, and, under certain conditions, entire bank accounts (even if some of the money in the account is legitimate), may be subject to forfeiture. ... the U.S. Department of Justice may bring criminal actions for money laundering that may include criminal fines, imprisonment, and forfeiture actions. In addition, banks risk losing their charters, and bank employees risk being removed and barred from banking."

Criminal penalties can be assessed for willful BSA regulation violations. Any individual, including a credit union employee, board member or other volunteer, can be found guilty and be subject to criminal fines of up to $250,000 or five years in prison, or both. If the individual commits a willful BSA violation while breaking another law or committing other criminal activity, he or she is subject to a fine of up to $500,000 or ten years in prison, or both. Violations of certain BSA provisions or special measures can make an institution subject to a criminal money penalty up to the greater of $1 million or twice the value of the transaction.

The federal banking agencies and FinCEN have the authority to bring civil money penalty actions for BSA violations. In addition to criminal and civil money penalty actions, individuals can be removed from banking for violation of anti-money laundering laws "as long as the violation was not inadvertent or unintentional”.

I know it’s not Halloween yet, but that’s some pretty scary stuff if you are a CEO, board member, or employee of a credit union. That you could be individually, as well as collectively, as an organization, be criminally or monetarily held accountable for actions you took (or didn’t take) or decisions you influenced that might be construed as a ‘violation’ of BSA, willful or not, could really keep you up at night! Unless…you seek regular training and keep up with the latest changes to the law to prevent or mitigate those possible violations.

Because the New Jersey Credit Union League (NJCUL) is always searching for low-cost, smart solutions for our credit union members, mid-April this year, NJCUL developed and launched a virtual, pre-recorded Bank Secrecy Act training program for Staff and a BSA/AML training program for Volunteers.

Both training programs are easy to register for, and to use, with a quiz that tests the knowledge of the credit union staff once they have taken the training. Both programs can also be administered individually or with a group. Each comes with a certificate from the League that regulators look for in the examination process.

Since April, over 325 management, staff and volunteers of New Jersey member credit unions have taken the NJCUL BSA virtual training!

The convenient, affordable, on-demand training helps credit unions meet the law’s objectives, including the BSA-assigned requirements for record keeping and reporting. Also, the training teaches proper maintenance under BSA for records that could provide evidence potentially used by law enforcement agencies in prosecuting money laundering and other financial crimes.

The staff training session will focuses on:

  • When and How to correctly complete a CTR
  • When and What is required to correctly complete a SAR
  • Customer Due Diligence (CDD) requirements and the 'Fifth Pillar'
  • Identifying money laundering and suspicious activity
  • USA PATRIOT Act 
  • Wire transfer requirements
  • Customer Identification Program (CIP) and OFAC compliance

The volunteer training session focuses on:

  • Money Laundering, BSA, USA PATRIOT Act, and OFAC
  • BSA Program Elements
  • Consequences of Noncompliance
  • Risk and Duties to Institutions
  • Internal Procedures and Controls
  • Role of the BSA/AML Officer
  • Independent Testing
  • Required Training
  • Currency Transaction Reporting
  • Suspicious Activity Reporting
  • Record keeping
  • Customer Identification Program
  • Section 314(a) List Checking

 

The sophistication of compliance programs varies significantly across the spectrum of credit unions because of their differing risk profiles, asset size and scope of operations. So, the question becomes, is it worth it to take the time for BSA Training? The answer is a resounding Yes! Although the requirements can be onerous and could require significant financial and staffing resources to comply, BSA programs and the information they generate have proven valuable in combating a variety of financial crimes and potential losses to the credit union itself.

Don’t wait, tell your BSA or Compliance Officer to get your staff and volunteers registered today!