Pre-Exam Process

Scope visitation Prepare request letter Review prior examination report and

workpapers Access BSA-reporting databases

and other sources Assess audit reports Review the bank’s BSA/AML risk

Assessment

Example of Requested Items – Suspicious Activity Reporting

Determine whether the bank uses a manual or automated account monitoring system

Request a list of the algorithms or rules used by the systems

Request copies of reports used for identification and monitoring of suspicious activity

Review any correspondence filed with federal law enforcement concerning the disposition of accounts reported for suspicious activity

Obtain copies of criminal subpoenas received by the bank

Example of Requested Items – Currency Transaction Reporting

Access to CTRs for the review period Access to internal reports used to

identify reportable currency transactions

List of products and services that may involve currency transactions

FFIEC Examination Manual

At a minimum, examiners are required to complete the following sections:

Scoping and Planning BSA/AML Risk Assessment BSA/AML Compliance Program Developing Conclusions and Finalizing the

Examination

Overview and Procedures

Core Examination Overview and Procedures serve as a platform for the BSA/AML exam and, for the most part, address legal and regulatory requirements of the BSA/AML compliance program.

Expanded Examination Overview and Procedures address specific LOBs, products, customers, or entities that may present unique challenges and exposures.

Examination Technique

Basic technique: Prior Exam Issue Audit P/P Interview Process Review through “Walkthrough” Transaction Testing Gaps? Cause?

Transaction Testing: - Objective: To assess the internal controls and risk management processes. - All examinations require transaction testing (should be risk-based)

When to Expand the Exam…

Significant deficiencies Increase in high-risk activities Lack of controls or oversight Transactions to/from money laundering

“havens” Employee fraud Use of suspense account to obscure

transactions Change in business focus that seems

inconsistent with the institution’s size, location, or strategic goals

Post Exam Process

Divided in sections:– Formulating Conclusions– Preparing the BSA/AML Comments

for the ROE– Preparing an Appropriate

Supervisory Response