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