Bank Regulators Release Statement Encouraging Collaborative Arrangements to Share Bank Secrecy Act Compliance Resources

Five regulatory agencies released an Interagency Statement on Sharing Bank Secrecy Act Resources (Statement) addressing collaborative arrangements used to share resources and manage Bank Secrecy Act (BSA) and anti-money laundering (AML) obligations more efficiently and effectively.  The Statement—issued on October 3, 2018, by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, FinCEN, the National Credit Union Administration, and the Office of the Comptroller of the Currency— explains how institutions can share BSA/AML resources in order to “better protect against illicit finance risks, which can in turn also reduce costs.”

The Statement is primarily aimed at community banks with lower risk profiles.  As explained by the Statement, banks use collaborative arrangements to pool human, technology, or other resources to reduce costs, increase operational efficiencies, and leverage specialized expertise.  The Statement identifies a number of non-exhaustive examples of shared resources that may be appropriate in a collaborative arrangement:

• Internal Controls. A collaborative arrangement could share resources to conduct internal control functions, such as updating and drafting BSA/AML policies and procedures.
• Independent Testing. Because employees at some banks often perform multiple compliance functions, a collaborative arrangement could utilize personnel at one bank to conduct the BSA/AML independent test at another bank.
• BSA/AML Training. A collaborative arrangement between two or more banks could be used to hire a qualified instructor to conduct BSA/AML training, allowing the banks to share costs.

However, the statement cautioned that collaborative arrangement should have appropriate oversight mechanisms, including advance approval from a bank’s board of directors.  For example, any such arrangement should be entered into formally with documentation outlining each party’s rights and responsibilities.  Finally, it is worth noting that the statement does not apply to collaborative arrangements for purposes of Section 314(b) of the USA PATRIOT Act, which provides a safe harbor for financial institutions that share information involving possible terrorist activity or money laundering.

The press release accompanying the statement is available here.