Our Former Federal Agents Assist Brokerage Firms, Banks, and Other Financial Institutions with All Aspects of Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) Compliance
Compliance Team Lead – Timothy E. Allen | Former Special Agent (U.S. Secret Service & DOJ-OIG)
The Bank Secrecy Act (BSA) and its enabling regulations establish several transparency, due diligence, and recordkeeping requirements for brokerage firms, banks, and other financial institutions that use the U.S. financial system. Among the BSA’s most well-known provisions are those that establish anti-money laundering (AML) compliance obligations. Violations of the BSA’s AML requirements can have severe consequences—up to and including criminal prosecution by the U.S. Department of Justice (DOJ).
But the BSA is just one of several federal AML laws. When addressing AML compliance, firms and institutions must ensure that they have a clear and comprehensive understanding of all pertinent statutory and regulatory requirements. Oversights are not tolerated, and ignorance is not a defense to most applicable federal charges.
Former Federal Agents with Deep Experience in BSA/AML Compliance
At Corporate Investigation Consulting, our BSA/AML compliance consultants are former federal agents who have deep experience on both sides of enforcement matters involving the Bank Secrecy Act and other pertinent statutes. Several of our consultants served as Special Agents and Special Agents-in-Charge at the DOJ and Federal Bureau of Investigation (FBI), with specific assignments to BSA/AML and other financial crime investigations. Combined with decades of experience in the private sector, this experience affords our consultants unique insights into the world of BSA/AML compliance, and it affords our clients the opportunity to take a proactive approach to fending off federal investigations—and favorably resolving federal investigations when necessary.
Key Areas of BSA/AML Compliance
While “BSA/AML compliance” is often referred to as a single entity, there are several distinct areas of compliance under the BSA and other pertinent sources of authority. As a non-exclusive list of examples, some of the areas of BSA/AML compliance we prioritize for our clients include:
Bank Secrecy Act Compliance
Combating money laundering is just one of several of the Bank Secrecy Act’s purposes. The BSA establishes numerous other compliance obligations as well, and firms and institutions that focus solely on AML compliance will leave themselves exposed to federal investigations and enforcement in a number of key areas.
Anti-Money Laundering Compliance
Likewise, while the Bank Secrecy Act is perhaps the primary source of authority in the area of anti-money laundering compliance, there are several other federal AML laws, and firms and institutions must comply with all pertinent rules and regulations as well. Along with the Bank Secrecy Act, we assist our clients with compliance under:
- Annunzio-Wylie Anti-Money Laundering Act
- Anti-Drug Abuse Act
- Corporate Transparency Act
- Financial Industry Regulatory Authority (FINRA) Rule 3310
- Intelligence Reform & Terrorism Prevention Act
- Money Laundering and Financial Crimes Strategy Act
- Money Laundering Control Act
- Money Laundering Suppression Act
- PATRIOT Act
Customer Identification (“Know Your Customer” or “KYC”)
Section 5328(l) of the Bank Secrecy Act requires financial institutions to adopt policies and procedures that are designed to ensure that they have a “reasonable belief” regarding their customers’ true identities. These customer identification programs (CIPs)—more commonly known as “know your customer” or “KYC” programs—are an essential component of BSA/AML compliance.
Enhanced Due Diligence
In addition to meeting the BSA/AML “know your customer” requirements, banks and other financial institutions must also meet various other enhanced due diligence requirements. We help our clients understand what requirements apply based on the services they provide and the customers they serve, and we help them implement policies, procedures, and protocols that are designed to ensure compliance with the BSA/AML enhanced due diligence requirements as a matter of course.
Suspicious Activity Reporting
Suspicious activity reporting (SAR) is another area of anti-money laundering compliance that is governed partially—but not exclusively—by the BSA. Financial institutions have an obligation to detect all suspicious transactions that raise AML-related flags, and they must properly report these suspicious transactions to the federal government within 30 calendar days.
Again, these are just a handful of examples of issues that brokerage firms and financial institutions must address in order to establish and maintain BSA/AML compliance. To learn more about your firm’s or institution’s specific requirements, schedule a complimentary initial consultation today.
Put our highly experienced team on your side
Roger Bach
Former Special Agent (OIG)
Timothy E. Allen
Former Senior Special Agent U.S. Secret Service
Chris J. Quick
Former Special Agent (FBI & IRS-CI)
Maura Kelley
Former Special Agent (FBI)
Ray Yuen
Former Supervisory Special Agent (FBI)
Michael S. Koslow
Former Supervisory Special Agent (DOD-OIG)
Marquis D. Pickett
Special Agent U.S. Secret Service (ret.)
Key Elements of a BSA/AML Compliance Program
To adequately address these (and all other) BSA/AML requirements, brokerage firms and financial institutions must implement comprehensive and custom-tailored compliance programs. While firms’ and institutions’ specific obligations will vary, some of the key elements of a typical BSA/AML compliance program include:
- Initial BSA/AML Compliance Assessment – As with all areas of corporate compliance, the first step toward establishing BSA/AML compliance is to assess the firm’s or institution’s obligations and needs.
- BSA/AML Compliance Policy Documentation – Brokerage firms and financial institutions must prepare and adopt BSA/AML compliance policy documentation that is both specific to their needs and broad enough to ensure full-scale compliance.
- Appointment of BSA/AML Compliance Officer – The appointment of a BSA/AML compliance officer or compliance team is an essential step toward effectively maintaining compliance, and it is required under various sources of statutory and regulatory authority.
- Training for Appropriate Personnel – All appropriate personnel must receive training regarding the firm’s or institution’s BSA/AML compliance program, and firms and institutions must document the successful completion of their training sessions.
- Firm or Institution–Wide Implementation – BSA/AML compliance program implementation is a multi-stage process, and firms and institutions must work with their consulting firms to ensure that they execute effective rollouts.
- Systems, Applications, and Protocols for Ongoing Execution – From KYC compliance to SAR compliance, firms and institutions must adopt the systems, applications, and protocols that are necessary to ensure ongoing execution.
- Monitoring, Auditing, and Enforcement – Brokerage firms and financial institutions must monitor the effectiveness of their BSA/AML compliance programs on an ongoing basis. They must also conduct periodic audits and enforce their personnel’s compliance duties as necessary.
BSA/AML compliance programs must meet various specific requirements. For example, in addition to addressing all pertinent areas of compliance, FINRA Rule 3310 requires written approval by a senior manager and independent testing to ensure proper implementation (federal laws also require independent testing). We guide our clients through the process of meeting these requirements as well, and we thoroughly document all steps of the process so that our clients can demonstrate compliance when necessary.
FAQs: What Does It Take to Establish (and Maintain) BSA/AML Compliance?
How can I assess whether my brokerage firm or financial institution is BSA/AML compliant?
Assessing whether a brokerage firm or financial institution is BSA/AML compliant is not an easy task—unless there are obvious shortcomings in the firm’s or institution’s compliance program. When we are engaged for BSA/AML compliance, we take a structured and highly detailed approach to assessing the sufficiency of our client’s current compliance efforts. Examining all aspects of our client’s operations in light of all pertinent sources of legal and regulatory authority, our former federal agents rely on centuries of combined experience to determine where the client’s shortcomings lie and what steps the client needs to take in response.
What are some of the most common BSA/AML compliance failures?
One of the most common—and most significant—mistakes we see firms and institutions make is failing to thoroughly assess their BSA/AML compliance obligations. A firm’s or institution’s BSA/AML obligations can vary widely based on a variety of different factors. Until an entity’s leadership team has a thorough understanding of what it needs to do to establish compliance, the entity will remain at risk for committing violations in all areas of its operations. So, brokerage firms and financial institutions need to first focus on understanding what is required, then they can shift their focus to meeting these requirements.
What are some of the factors that will determine a brokerage firm’s or financial institution’s BSA/AML obligations?
There are several factors that go into determining a brokerage firm’s or financial institution’s obligations under the BSA and other pertinent anti-money laundering laws and regulations. Ultimately, however, these factors address one central question: What AML risks do the firm’s or institution’s operations entail? While the BSA/AML requirements are extensive, federal authorities do not expect firms and institutions to go overboard, but rather to take adequate steps to ensure that they prevent, detect, and report suspicious transactions when necessary.
What types of transactions are subject to the BSA’s suspicious activity reporting requirements?
The BSA and other federal laws require financial institutions to report any transactions that “might signal criminal activity.” In addition to cash transactions exceeding $10,000, this includes other transactions that have hallmarks of money laundering or raise red flags for tax evasion or other crimes. We help our clients put mechanisms in place that are designed to detect all transactions with potential BSA/AML implications.
Speak with a BSA/AML Compliance Consultant at Corporate Investigation Consulting
If you need to know more about BSA/AML compliance, if your firm or institution needs to update (or overhaul) its BSA/AML Compliance program, or if you have concerns about possible BSA/AML enforcement activity, we encourage you to get in touch. To discuss your firm’s or institution’s needs with a BSA/AML compliance consultant at Corporate Investigation Consulting in confidence, please call 866-352-9324 or inquire online today.