Auditing for Effective Training

Author: Maleka Ali, CAMS-Audit

Anti-money laundering (AML) statutes were first introduced in the United States in the 1970s in the form of the Bank Secrecy Act. This established basic record keeping and reporting requirements and has since expanded in complexity to also require banks to establish procedures to ensure compliance with the Bank Secrecy Act (BSA). The regulations dictated that financial institutions must establish and maintain a BSA/AML compliance program that includes the following four pillars: (1) A system of internal controls to ensure ongoing compliance (2) Independent testing of BSA compliance (3) A specifically designated person or persons responsible for managing BSA compliance (4) Training for appropriate personnel.

Then in order to maintain uniformity in the BSA exam process, the Financial Crimes Enforcement Network (FinCEN), in cooperation with all the federal banking regulatory agencies and the Office of Foreign Asset Control (OFAC), published the Federal Financial institutions Examination Council’s (FFIEC) Bank Secrecy Act/Anti-Money Laundering Examination manual 1 in June 2005. This manual, which has since been updated, provides guidance to federal agency examiners and auditors when conducting a BSA/AML exam or audit. This manual walks the examiner or auditor through the steps necessary to thoroughly review an institution’s compliance with the four pillars listed above. It also stresses that the BSA/AML examination is supposed to assess the effectiveness of an institution’s BSA/AML compliance program and how well the institution incorporates the basic pillars into its BSA compliance.

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