More Must Reading: FFIEC Updated BSA/AML Exam Manual (Dec. 8, 2014)
The FFIEC’s recently updated BSA/AML Examination Manual is emphasizing—as it has in the past—that the buck stops with issuing banks in terms of ultimate responsibility for BSA/AML compliance for prepaid access products, regardless of agreements or contracts with other players in the value chain. Although this isn’t a new concept, it bears highlighting as experience is showing that examiners are holding banks to increasingly rigorous BSA/AML compliance standards. The prepaid access section begins on page 227 of the manual, and the exam procedures are provided on pages 233-234.
According to John Walsh, CEO of SightSpan, the most significant changes in the updated manual relate to how businesses address suspicious activity reporting and transaction monitoring. “Before the update, different types of financial institutions were being held to different standards regarding filing suspicious activity reports (SARs),” he tells Paybefore. “The update has leveled the playing field by providing guidance that applies to all types of financial institutions.” Walsh notes that the update provides information related to transaction monitoring systems commensurate with risk profiles, appropriate compliance staffing levels and components of an effective suspicious activity compliance program.
In addition to providing clarity, Walsh says the updated manual will assist the AML audit community in establishing baseline criteria for regulatory and private sector audits.
All banks—particularly those that use third parties, such as program managers or processors, in conjunction with delivering prepaid access—should take note of the latest edition of the manual, which has been called the “playbook” for AML compliance. And, third parties with relationships with prepaid issuing banks also should take note to further their position as banks’ trusted partners in the delivery of prepaid access.