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BSA/AML Examination Manual Update


On February 25, 2021, The Federal Financial Institutions Examination Council (FFIEC) released the latest updates to the Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual (Manual). Although the Manual is intended to provide guidance to examiners on how to evaluate financial institutions’ compliance with the Bank Secrecy Act and anti-money laundering requirements, it does offer invaluable insight to regulated entities about regulatory expectations and how they will be evaluated in the examination process.


The following sections of the Manual were updated:

  • Introduction – Assessing Compliance with Bank Secrecy Act Regulatory Requirements

  • Customer Identification Program

  • Currency Transaction Reporting

  • Transactions of Exempt Persons

The addition of a new section (i.e., Introduction) under the chapter “Assessing Compliance with BSA Regulatory Requirements” reinforces the regulators overall risk-focused approach to the entire BSA/AML examination process. The most important aspect of this section is the emphasis on the examination procedures that must be performed based on the bank’s profile, size or complexity, quality of independent testing, changes to the bank’s BSA/AML compliance officer or department, expansionary activities, new innovations and technologies, or other relevant factors. In addition, the scope of a BSA/AML examination should be tailored to each bank’s size, complexity, and organizational structure, and have unique risk profiles. Furthermore, the examiners are directed to focus their review of risk management practices and compliance with BSA regulatory requirements on areas of greatest ML/TF and other illicit financial activity risks.


Here is the summary of the changes to the other three sections of the Manual noteworthy of attention.


Customer Identification Program:

  • Provided an exception for opening an account for a customer who has applied for a TIN and alternative process for obtaining CIP identifying information on credit card accounts;

  • Added information on verification through non-documentary methods;

  • Added clarification on recordkeeping and retention requirements;

  • Added a subsection “Exemptions” that may be granted by the regulators to any bank or account from CIP requirements;

  • Added a subsection “Examiner Assessment of the CIP Process” which outlines the regulators’ risk-focused examination approach that is in-line with what was expressed in the new “Introduction” mentioned above; and

  • Updated Customer Identification Program Examination and Testing Procedures.

Currency Transaction Reporting:

  • Added a subsection “Identification Required” which outlines what the examiners would look for on how a bank should verify and record information related to CTRs;

  • Expanded the description on the aggregation of currency transactions;

  • Added a subsection “Structured Transactions – CTR Requirements” which provides description and conditions on evading CTR reporting requirements;

  • Updated the filing and record retention section to reflect FinCEN’s BSA E-Filing System;

  • Expanded the guidelines for CTR back filing and amendment;

  • Added a subsection “Examiner Assessment of the CTR Process” which outlines the regulators’ risk-focused examination approach that is in-line with what was expressed in the new “Introduction” mentioned above; and

  • Updated Currency Transaction Reporting Examination and Testing Procedures.

Transactions of Exempt Persons:

  • Updated list and qualifications of Phase I and Phase II CTR Exemptions;

  • Added a subsection “Designation of Certain Exempt Persons” which includes electronic filing requirements;

  • Added a subsection “Operating Rules” which outlines the steps a bank must follow in determining the qualifications, documenting the process, designating an exempt person in compliance with Transactions with Exempt Persons regulation;

  • Added a subsection “Examiner Assessment of the CTR Exemption Process” which outlines the regulators’ risk-focused examination approach that is in-line with what was expressed in the new “Introduction” mentioned above; and

  • Updated Transactions of Exempt Persons Examination and Testing Procedures.

Please refer to the Manual for complete details of the changes: https://bsaaml.ffiec.gov/manual


Romy Vinas

Chief Compliance Officer

iSoftware4Banks, Inc.



Our mission at iSoftware4Banks, Inc. is providing bankers with years of experience in the operations of banks with strength, energy, and authority.


iSoftware4Banks can provide your organization assistance if you need help with any aspect of the BSA/AML Examination Manual. info@is4banks.com

Blog Resources:

https://www.ffiec.gov/press/pr022521.htm

https://www.occ.gov/news-issuances/bulletins/2021/bulletin-2021-10.html

https://www.federalreserve.gov/supervisionreg/srletters/SR2105.htm

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