Pre-Exam Process

1
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 banks BSA/AML risk Assessment

2
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

3
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

4
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

5
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.

6
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)

7
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 institutions size, location, or
  strategic goals

8
Post Exam Process

• Divided in sections
• Formulating Conclusions
• Preparing the BSA/AML Comments for the ROE
• Preparing an Appropriate Supervisory Response