expanded.doc - BSA/AML Compliance Program Structures...

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BSA/AML Compliance Program Structures — Overview EXPANDED EXAMINATION OVERVIEW AND PROCEDURES FOR CONSOLIDATED AND OTHER TYPES OF BSA/AML COMPLIANCE PROGRAM STRUCTURES BSA/AML Compliance Program Structures — Overview Objective . Assess the structure and management of the organization’s BSA/AML compliance program and if applicable, the organization’s consolidated or partially consolidated approach to BSA/AML compliance. Every bank must have a comprehensive BSA/AML compliance program that addresses BSA requirements applicable to all operations of the organization. 1 Banking organizations have discretion as to how the BSA/AML compliance program is structured and managed. A banking organization may structure and manage the BSA/AML compliance program or some parts of the program within a legal entity; with some degree of consolidation across entities within an organization; or as part of a comprehensive enterprise risk management framework. Many large, complex banking organizations aggregate risk of all types (e.g., compliance, operational, credit, interest rate risk, etc.) on a firm-wide basis in order to maximize efficiencies and better identify, monitor, and control all types of risks within or across affiliates, subsidiaries, lines of business, or jurisdictions. 2 In such organizations, management of BSA risk is generally the responsibility of a corporate compliance function that supports and oversees the BSA/AML compliance program. Other banking organizations may adopt a structure that is less centralized but still consolidates some or all aspects of BSA/AML compliance. For example, risk assessment, internal controls (e.g., suspicious activity monitoring), independent testing, or training may be managed centrally. Such centralization can effectively maximize efficiencies and enhance assessment of risks and implementation of controls across business lines, legal entities, and jurisdictions of operation. For instance, a centralized BSA/AML risk assessment function may enable a banking organization to determine its overall risk exposure to a customer doing 1 Neither FinCEN nor banking agency rules impose a specific BSA/AML compliance program obligation on Bank Holding Companies, Unitary Savings and Loan Holding Companies, and parents of Industrial Loan Companies. Nevertheless, these entities, as a result of their primary business function (e.g., insurance company or broker-dealer), may be subject to a BSA/AML compliance program obligation under Treasury rules or rules of other agencies. 2 For further detail, refer to Compliance Risk Management Programs and Oversight at Large Banking Organizations with Complex Compliance Profiles, Federal Reserve Board SR Letter 08-8, October 16, 2008 (FRB Guidance). The FRB Guidance generally addresses overall compliance functions within large, complex firms, and endorses for all firms the principles set forth in the Basel Committee on Banking Supervision’s guidance, Compliance and the compliance function in banks (April 2005).
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