Supervision and Regulation Letters

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SR 19-11:

Joint Statement on Risk-Focused Bank Secrecy Act/Anti-Money Laundering Supervision

BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C. 20551

DIVISION OF
SUPERVISION AND REGULATION

SR 19-11
July 22, 2019
Revised July 24, 2019

On July 24, 2019, the Joint Statement on Risk-Focused Bank Secrecy Act/Anti-Money Laundering Supervision was revised. Footnote 9 was updated to 31 C.F.R § 1020.210(b)(5).

TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE BANK

SUBJECT:

Joint Statement on Risk-Focused Bank Secrecy Act/Anti-Money Laundering Supervision

Applicability:  This guidance applies to all financial institutions supervised by the Federal Reserve that are subject to the Bank Secrecy Act.

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency (collectively, the federal banking agencies) and the U.S Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) are issuing the attached joint statement to emphasize their risk-focused approach to examinations of banks' Bank Secrecy Act/anti-money laundering (BSA/AML) compliance programs.

The statement is intended to improve the transparency in the federal banking agencies' risk-focused approach for planning and performing BSA/AML examinations and does not establish new legal or regulatory requirements, nor does it establish new supervisory expectations.

As explained in the attached joint statement, federal banking agency examiners evaluate the adequacy of a bank's BSA/AML compliance program relative to its risk profile as well as compliance with applicable laws and regulations. Examiners review risk management practices to evaluate and assess whether a bank has developed and implemented effective processes to identify, measure, monitor, and control risks. The federal banking agencies and FinCEN recognize that banks vary in focus1 and complexity and that these differences create for each bank a unique risk profile. Accordingly, the scope of each BSA/AML examination varies by bank. Federal banking agency examiners conduct risk-focused BSA/AML examinations, and tailor examination plans and procedures based on the risk profile of each bank.

Federal Reserve Banks are asked to distribute this letter to the supervised institutions in their districts and to appropriate supervisory staff. Questions regarding this letter should be directed to the following individuals:

  • Division of Supervision and Regulation:  Koko Ives, Manager, BSA/AML Compliance Section, at (202) 973-6163 or Jennifer White, Lead Financial Institution and Policy Analyst, at (202) 452-3964; or
  • Legal Division:  Jason Gonzalez, Senior Special Counsel, at (202) 452-3275.

In addition, supervised organizations may send questions via the Board's public website.2

signed by
Michael S. Gibson
Director
Division of
Supervision and Regulation

Attachments:
Notes:
  1. For example, a bank with a localized community focus likely has a stable, known customer base.  Return to text.
  2. See, http://www.federalreserve.gov/apps/contactus/feedback.aspx.  Return to text.
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Last Update: July 24, 2019