Banks hoping to build a strong, reliable Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) approach should focus on a number of strategies and actions—including developing an efficient operating model. In our view, a good operating model is essential to a sustainable BSA/AML program.

But when we talk about a “good” operating model, what do we mean? We believe five components are part of a good model:

  • Onboarding and periodic reviews
  • Transaction monitoring alert reviews
  • Office of Foreign Asset Control (OFAC) and sanctions match reviews
  • Compliance advisory
  • And a business control unit providing a first line of defense for internal controls

Here’s a closer look:

When it comes to onboarding and periodic review, the goal is to identify the number of staff needed for these activities, based on existing customer base, the complexity of Know Your Client files and anticipated new customers.

For both transaction monitoring alert and OFAC reviews, a level 1 and level 2 reviewer are recommended—the key question is where the review functions are housed. For some institutions, the Compliance function houses level 2 reviews. For others, levels 1 and 2 are both housed within Operations. Size and complexity play a role in determining the best fit for each financial firm.

Like the Internal Audit function, the Business Unit Controller should conduct annual review of the BSA/AML controls, as well as reviewing key controls throughout the year. Monitoring BSA/AML KPIs and KRIs falls under this function as well.

And finally, the Compliance Advisory function should be responsible for escalating cases, identifying areas for improvement, performing annual risk assessments and similar tasks.

Our paper, Life After Remediation: Building a Sustainable Bank Secrecy Act and Anti-Money Laundering Program, offers a full outline of steps financial institutions can take to build reliable BSA/AML programs. And for more insights, check out our new Fraud and Financial Crime blog and the thoughts from our various fraud and financial crime team members.

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