The Federal Financial Institutions Examination Council ("FFIEC") updated its "Bank Secrecy Act/Anti-Money Laundering Examination Manual."

In an interagency statement, FFIEC (made up of the Federal Reserve Board ("FRB"), the FDIC, the National Credit Union Administration, the OCC and the State Liaison Committee) emphasized its risk-focused approach to the supervision of banks for Bank Secrecy Act/Anti-Money Laundering ("BSA/AML") compliance.

The FFIEC stated that significant revisions to the examination manual include:

  • Risk-Focused BSA/AML Supervision: Instructions to examiners for tailoring BSA/AML examinations to a bank's risk profile;

  • Assessing the BSA/AML Compliance Program: Instructions to examiners for assessing the adequacy of a bank's BSA/AML compliance program;

  • BSA/AML Risk Assessment: Instructions to examiners for evaluating the adequacy of a bank's BSA/AML risk assessment process, including the identification of specific risk categories and an analysis of the information used to assess risks; and

  • Finalizing the Exam: A reminder to examiners that banks have flexibility in the design of their BSA/AML compliance programs.

FFIEC noted that the update does not establish "new requirements," but includes regulatory changes since the manual was last updated in 2014.

Commentary

Banks should take the FFIEC statement that the update does not establish "new requirements" with a grain of salt. The updates contain a slew of supervisory expectations that did not appear in the 2014 version of the manual. While there are significant differences between mandatory regulatory requirements and supervisory expectations, banks that do not have a firm grasp of both can be caught flat-footed during an examination.