FinCEN and the OCC recently issued civil money penalties to the tune of $140 million to USAA Federal Savings Bank. The Bank failed to maintain a BSA/AML Program inclusive of the required program elements (internal controls, BSA officer, independent testing, training, and customer due diligence). Deficiencies were noted with internal controls, detecting suspicious activity, training, and third-party management to name a few.
The OCC had communicated to the bank that there were significant problems with the BSA/AML Program as early as 2017 and the Bank committed to overhauling its BSA/AML Program in 2018. They failed to meet the first March 31, 2020, deadline and also an extended deadline (June 30, 2021), for such overhauls.
The order states, that the program was rudimentary, lacking comprehensive risk-based policies and procedures and the operational rigor needed to successfully address the risks associated with its customer base, products and services, and geographies. While the Bank’s AML program improved over time, the Bank still failed to develop internal policies, procedures, and controls sufficient to meet the minimum requirements of the BSA.
It was found that the BSA/AML compliance department was significantly understaffed during the applicable period and about 76% of compliance staffing was through third-party contractors. However, the bank did not properly train these contractors and/or ensure they had the necessary qualifications or expertise. The bank also implemented a new monitoring system but failed to adequately test it before launching it. Not only did the new system fail to detect approximately 1,300 cases that were flagged by the previous system, but the new system also produced thousands of alerts that were not reviewed. At the end of 2021, there was a backlog of 90,000 un-reviewed alerts and 6,900 un-reviewed cases.
This is a good example of what not to do with respect to your BSA/AML Program.
It’s also a good way to learn from others’ mistakes. If you need help with your BSA/AML program, whether you need an independent audit, independent validation of your BSA/AML software or just have some questions, give us a call!
Published
2022/04/06
