Is Your Credit Union Aware of These Bank Secrecy Act Violations?

August 10, 2023


Financial transactions are increasingly digital and global. The importance of protecting credit unions from threats such as Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) violations cannot be overstated. These violations can undermine the integrity of financial institutions, erode trust, and expose credit unions to severe penalties. Understanding these violations, recognizing their signs, and proactively addressing them is critical.

The BSA and AML regulations were established to prevent and detect financial crimes, primarily money laundering and terrorist financing. These crimes are constantly evolving and your members trust you to protect them while serving their needs. To keep your credit union compliant and your members safe, it’s essential you understand these financial threats well.

Let’s dive in!

Common Bank Secrecy Act and Anti-Money Laundering Violations

BSA and AML violations can take many forms within a credit union. Here are 5 of the most frequent violations:

  1. Late 314(a) Searches: Credit unions often fail to complete 314(a) searches in a timely fashion. It’s essential for credit unions to keep their U.S. Patriot Act contacts up-to-date and verify these profiles whenever changes occur. They should also have clear policies outlining the process for handling Financial Crimes Enforcement Network (FinCEN) requests, filing suspicious activity reports (SARs), and conducting independent testing of 314(a) compliance.
  2. Inadequate BSA Training: Not all credit union board members and BSA officers receive proper BSA training. It’s crucial for new staff to be trained as soon as possible, including tailored examples of money laundering and suspicious activity monitoring. All training must be documented, including attendance records and corrective actions for those who fail to attend.
  3. No Independent Testing: Finding qualified in-house staff to conduct independent testing can be challenging. The National Credit Union Administration (NCUA) encourages credit unions to utilize BSA resource sharing as allowed by the Interagency Statement on Sharing Bank Secrecy Act Resources.
  4. Lack of Written and Approved BSA Compliance Program: BSA/AML compliance programs need to be written, approved by the board, and documented in board meeting minutes. These programs should include internal controls, independent testing, a designated BSA officer, appropriate personnel training, member due diligence, and a customer/member identification program.
  5. Noncompliant SAR and CTR Filings: Currency Transaction Reports (CTRs) are often not filed within the required 15 calendar days or for every cash transaction over $10,000. Similarly, SARs are frequently not filed within the mandated 30 or 60 days, and they often lack completeness and accuracy, particularly in the narratives.

Remember, BSA and AML violations can have serious consequences. By understanding these violations and taking proactive steps to prevent them, credit unions can provide a secure environment for their members while ensuring regulatory compliance.

Need more detailed information on BSA and AML regulations and how to avoid violations? Refer to these resources provided by CUNA and NCUA! Stay informed, stay compliant, and continue to serve your members with confidence and integrity.

Strengthen Your Bank Secrecy Act Compliance Strategy with IMS

Adhering to BSA and AML regulations is more than just a compliance requirement. It’s a crucial part of maintaining the trust of your members and preserving the reputation of your credit union. By understanding these regulations and taking proactive steps to prevent violations, you can protect your institution from hefty fines and damage to your reputation.

At IMS, we specialize in helping credit unions maintain compliance. Using Polaris Sonar, we apply machine learning to discover, classify, and report on sensitive data without impacting production. 

By partnering with IMS, you can focus more on serving your members and less on regulatory compliance worries and data security concerns. Contact us today if you have any questions or let us walk you through our services and their features, all made specifically with your credit union in mind!

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