The Federal Financial Institutions Examination Council (FFIEC) issued today the 2007 Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual. The revised manual reflects the ongoing commitment of the federal and state banking agencies and the Financial Crimes Enforcement Network (FinCEN) to provide current and consistent risk-based guidance for banking organizations to comply with the BSA and safeguard operations from money laundering and terrorist financing.1 The manual has been updated to further clarify supervisory expectations and incorporate regulatory changes since the manual's 2006 revision.
The attached interagency statement outlines the significant revisions to the manual. These revisions include updates to the chapters on customer due diligence, suspicious activity reporting, foreign correspondent accounts, electronic banking, and trade finance. The revisions also include changes to the chapter on foreign correspondent account recordkeeping and due diligence to reflect the newly issued enhanced due diligence requirements for such accounts, and new language describing the Office of Foreign Assets Control (OFAC) requirements for automated clearing house transactions. Finally, the agencies have expanded the discussion on providing banking services to money services businesses, updated the red flags appendix, and added an index.
As with prior versions of the FFIEC BSA/AML Examination Manual, the 2007 revised manual does not set new standards; instead, it is a compilation of existing regulatory requirements, supervisory expectations, and sound practices in the BSA/AML area. To foster consistency, the manual includes the examination procedures that will be used by each agency's examiners and will be provided to state banking agencies. The manual underscores the importance of banking organizations effectively managing their BSA/AML risk (i.e., the risk of abuse by money launderers or terrorist financiers) by developing BSA/AML compliance programs tailored to their organizations' risk profiles. Similarly, banking organizations are expected to establish risk-based programs to comply with OFAC requirements.
As in prior versions, the manual uses a "core" and "expanded" format. The core sections include guidance and procedures for examination scoping and planning, reviewing the components of the BSA compliance program, determining compliance with other BSA/AML requirements, and reviewing policies and procedures to support compliance with the sanctions administered by OFAC.2 The expanded sections provide detailed guidance and procedures on specific lines of business, products, or entities that may present unique BSA/AML challenges and exposures for banks.
Federal Reserve examiners should begin using the examination procedures as set forth in the manual for all BSA/AML examinations beginning September 1, 2007. With today’s release, the 2006 FFIEC BSA/AML Examination Manual is retired.
Reserve Banks are asked to distribute this SR Letter to the domestic and foreign banking organizations supervised by the Federal Reserve in their districts, as well as to supervisory and examination staff. Questions concerning the FFIEC BSA/AML Examination Manual should be addressed to Timothy P. Leary, Senior Special Anti-Money Laundering Examiner, (202) 452-2428, or Suzanne L. Williams, Manager, BSA/AML Risk Section, (202) 452-3513.