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19 Oct

Besides the Responsibilities Directly Related to BSA Reporting Requirements: Investigations Assignment, MIT, US


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Technology and Data
This is a two-part assignment:
Locate, read, and summarize information from the web sites referenced in this module or in other articles about data analytics and how technology is used for BSA and AML compliance by financial institutions.
Define and discuss:
What is transaction data and monitoring?
What are AML “Alerts”?
How can technology help financial institutions know their customers?
How does technology help a bank manage risk and comply with regulations?
Module 6: BSA Compliance – the Financial Industry’s Perspective – Introduction                
In this module, we will address some of the costs and issues related to BSA compliance.  You have seen how BSA applies to others besides financial institutions.  Because of the BSA and anti-money laundering statutes, banks and businesses have due diligence obligations requiring them to know their customers and the nature of their businesses.
Although narcotics trafficking is the crime most commonly thought of when discussing money laundering, a wide variety of other specified unlawful activities require financial scrutiny.  Some of these include public corruption, bribery, kleptocracy, health care fraud, bank/mortgage fraud, International Emergency Economic Powers Act (IEEPA), and in our post 9/11 world – terrorism.
In previous modules, we have discussed the uses and benefits of BSA reports to law enforcement.  Producing those reports comes at a high cost to the businesses required to comply and at an even higher cost if the compliance is deemed to be deficient.  Both due diligence and complying with the BSA are expensive tasks that are cost centers to the financial institutions.  (Indeed, there are companies and technology products that service financial institutions and businesses of all sizes to assist in meeting the compliance and reporting requirements imposed by the BSA, the Treasury Regulations, and FinCEN.)
In this module, we explore some of those costs from the perspective of the financial institutions, all of which point out that BSA compliance is a cost center in a business designed to generate profits; many would argue the costs imposed on financial institutions are too high.
As a starting point, think about what skills you believe an anti-money laundering/BSA analyst must have to work in a bank’s compliance department, and what salary one with those skills could command (or, think about the converse – what it costs the bank to employ a skilled analyst).   Access the employment search tool command search “anti-money laundering” or similar keywords.
https://www.indeed.com/(Links to an external site.)
Consider the list of desired skills you found in the position descriptions and any posted salary information as you consider the cost issues in the module.
The Compliance Department
Besides the responsibilities directly related to BSA reporting requirements, there are other types of monitoring and reasons why banks need to “Know Your Customer” and due diligence programs.
The BSA reporting requirements are an important part of the monitoring systems used by banks and they support other types of risks that are visible by banks when they analyze and understand who is conducting transactions through their institution and fully understand the economic reality behind the movement of money.  Identifying disguised transactions is part of the anti-money laundering (AML) responsibilities.
Assuring that transactions are not being conducted with people or entities on the Officer of Foreign Asset Control’s (OFAC) SDN list is another monitoring function of the compliance program.  The bank is also in a position to identify transactions involving Politically Exposed Persons (PEP) which may fall under the provisions of the Foreign Corrupt Practices Act (FCPA).  This anti-bribery statutes concern foreign public officials and is closely related to kleptocracy issues.
In the examples above, the bank’s compliance department monitors transactions and reviews the credentials of its customers focusing on potentially illegal activity occurring by its customers and financial transactions involving their accounts at the bank.  Two other areas exist where the bank’s monitoring program focuses on activity that is not directly related to their customers:
Correspondent banking activity involving financial institutions acting as a bank for other banks.  For example, a bank in one location may not have access to a financial market where one of its customers’ needs to conduct a financial transaction.  The banks use financial relationships with other banks to compete with the transactions.  The correspondent bank will have very limited information about the originating customer, the final beneficiary, and the details of the transactions.
Fraud & Revenue Protection is another reason for monitoring accounts for suspicious activity.  Counterfeit checks, identity theft, other types of fraudulent withdrawals create a financial risk for financial institutions.
There are other types of services provided by different compliance departments in financial institutions and businesses.  The ones highlighted in the course give a good understanding of BSA and that financial transaction monitoring that occurs in our global economy.
It is not humanly possible for humans to monitor and identify large amounts of seemingly unrelated financial transactions without the use of power analytic tools.
Besides the Responsibilities Directly Related to BSA Reporting Requirements: Investigations Assignment, MIT, US

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