WASHINGTON – The Government Accountability Office was recently tasked with investigating how federal banking regulators, including NCUA, examine for Bank Secrecy Act compliance and identify and track violations for speedy fixes.
GAO made a number of recommendations, such as better communicating emerging risks through updates of the interagency examination manual and other guidance used by NCUA, the Financial Crimes Enforcement Network, and the federal banking regulators. The agencies should periodically review BSA violation data to determine whether additional guidance is necessary. GAO also recommended that the agencies look into the possibility of developing a uniform classification system for BSA compliance problems. FinCEN and the regulators supported its suggestions, according to GAO.
Credit unions and other financial institutions have been citing statistics of the costs associated with BSA compliance and working to lessen the regulatory burden in this area.
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Financial institutions and compliance experts have applauded the agencies for developing the BSA examination procedures manual, which will be updated annually. Not only has the manual provided a one-stop source for BSA compliance, but also helps maintain uniformity among the regulators. FinCEN has begun to notice patterns of violations and the regulators are working together to see if additional guidance is needed. Despite the enhancements, GAO still found differences between the regulators' guidance and definitions for classifying BSA problems.
GAO found that less transaction documentation was required of smaller institutions and that the Office of Thrift Supervision, FDIC, and NCUA permitted examiners to "exercise professional judgment" over what should be required for documentation. Methods of examiner training varied by agency as well.
NCUA filed the most BSA violations, according to GAO, at 4,754. Second was FDIC at 2,576; NCUA also took the most enforcement actions, 1,824, by far, but some of these were informal.
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