Customized Risk Assessments

While the Federal Financial Institution Examination Council's (“FFIEC”) Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual provides guidance on developing a risk assessment for an institution's BSA/AML program, many community banks continue to struggle with developing a detailed and appropriate risk assessment for their bank's BSA/AML program that meets the complexity of the regulatory requirements.

An appropriate risk assessment should be designed to dictate your bank’s overall BSA/AML compliance program. Such a program is generally inclusive of your BSA/AML policies and procedures, the necessary qualifications and experience of your BSA Officer, the extent and depth of the required training and internal controls, the frequency and scope of the independent test, and the requirements for your customer identification program.

One of the most common deficiencies cited by regulators such as the Federal Reserve, is that the risk assessment does not take into consideration all of the institution's business lines and operating subsidiaries. This is particularly true for companies that administer the BSA/AML compliance program at the holding company level or at the lead bank. Management must consider how the risks of one business line are interrelated with other business lines within the organization.

Some smaller institutions with less complex structures often forget to incorporate trust, broker/dealer, and mortgage activities. However the institution is structured, the risk assessment must exhibit cross-organizational awareness and reassess risks periodically in order to keep pace with the changing business environment.

Our risk consultants understand the complexity and regulatory expectations in this regard and can assist you in developing a customized risk assessment or reviewing the adequacy of one that may already be in place. Our proprietary process is the cumulative result of decades of first hand working knowledge with community banks. Our process results in the development of an assessment that will document your understanding of your risks and can be integrated with your BSA/AML program. A well-developed risk assessment will assist you identifying and understanding your BSA/AML risk profile and ensure that your BSA program includes processes and controls that are commensurate with the identified level of risk.