What Is A Bank Secrecy Act Officer?
A Bank Secrecy Officer works within a bank, credit union, or similar financial institution, to ensure compliance with laws and regulations pertaining to the United States’ Bank Secrecy Act.
The Bank Secrecy Act (BSA) has been in place in the United States since 1970, and is administered by the Financial Crimes Enforcement Network (FinCen). Essentially, the act requires banks and other financial institutions to help the government combat financial crime – in particular, money laundering. One of the requirements of the BSA is the appointment of a BSA Officer: an individual charged with overseeing their employer-organization’s compliance with Bank Secrecy Act anti-money laundering regulations.
The role of the BSA Officer is integral to a bank’s legal and regulatory standing and involves detailed knowledge of both bank policies and the law. With that in mind, the appointment should be made with careful consideration.
While the Bank Secrecy Act was originally introduced in the United States to assist in criminal tax proceedings, over the years its scope has grown to include a primary focus on anti-money laundering (AML) policies and procedures and, more recently, amendments relating to the USA Patriot Act.
In their professional capacity, the BSA Officer oversees all aspects of their firm’s Bank Secrecy Act Compliance Program. They work to develop, implement, and coordinate AML systems and controls, and report to state and federal authorities in the event of suspicious activity which may include a wider range of financial crimes such as tax evasion and fraud.
From a practical perspective, the BSA Officer is responsible for:
- Managing and administrating visits from independent state and federal auditors.
- Coordinating and implementing responses to audits.
- Maintaining proficient knowledge of the current AML compliance climate, including BSA, USA Patriot Act, and OFAC regulations.
- Assisting internal business units with risk assessments of activities typically related to money laundering.
- Tracking and monitoring high risk customers and accounts, and performing relevant record-keeping activities.
- Investigating and filing reports of suspicious activity to the authorities – such as cash purchases of negotiable instruments, and transactions of over $10,000.
- Briefing and making BSA-AML compliance recommendations to senior management.
Given its legal implications, the BSA Officer job should be held by an individual with the knowledge, experience and authority to perform their duties effectively. When hiring your BSA Officer, certain important factors should be considered:
Time and Resources
The time and resources necessary for a BSA Officer to carry out their role may vary depending on the size of their institution. Potential conflicts of interest should also factor into hiring decisions. While smaller firms may be able to designate a part-time BSA Officer, larger, complex organizations, should designate a full-time officer with no other duties.
Authority and Independence
There is no regulatory requirement that a BSA Officer holds a specific title. Ideally, however, the BSA Officer should be at least a director-level employee so that they are able to act with authority and independence within their professional environment, and are able to make the decisions required of them with confidence.
Knowledge and Understanding
A BSA Officer should have sufficient knowledge and understanding not only of the Bank Secrecy Act, but of their organization’s own AML regulations. In practice, this means understanding their organization’s products and services, its customers, relevant territorial legislation, and the methodologies of the financial crimes they may have to investigate.
To maintain this level of knowledge, the BSA Officer should have some level of BSA-AML compliance training – and update that training regularly.
One of the most important aspects of hiring a BSA Officer is the participation and engagement of senior management. The position reflects a financial institution’s commitment to the fight against financial crime, and by extension affects its reputation amongst customers and clients, and the wider professional community.
That being the case, board members should be able to offer their BSA Officer comprehensive support and work with their appointee to create an environment in which AML compliance is regarded as a professional goal, rather than a regulatory burden.