A Trust Company & the Bank Secrecy Act: Is your BSA program good, or good enough?

• April 28, 2023
• Karen Leiter

While all aspects of the Bank Secrecy Act (BSA) rules may not be required for a trust company that are required for depository financial institutions, the oversight obligation and importance is not diminished. Trusts intrinsically have elevated risk based on the transparency of structure, ownership, and purpose.

Section 352 of the USA PATRIOT Act requires financial institutions* to establish AML programs that, at a minimum, include: (1) The development of internal policies, procedures, and controls; (2) the designation of a compliance officer; (3) an ongoing employee training program; and (4) an independent audit function to test programs.

*Keep in mind when you are reading the regulation and you, as a trust company, think “we are not a financial institution” that many times throughout the regulation this statement is made: The following information describes the effect of certain previous rulemakings on banks, and specifically on banks lacking a Federal functional regulator. Links below for references.

Is your BSA program good, or good enough?

When you assess and manage your program, what is your answer to “Is my BSA program good, or good enough?” The obligations we have under BSA are risk based which is GREAT!  That means we get to determine controls and oversight and appropriateness! Yet, in the same thought you should also review enforcement actions (FinCEN $1.5 million Civil Money Penalty against trust company) and your oversight management then question if your program is appropriate for your risk?  Utilize the links below to educate yourself on a trust company’s BSA requirements. 

A sufficient BSA program is no longer an option for trust companies. Whether you need to build out the program or ensure independent testing, we can help.

• FFIEC BSA/AML Manual – AML Compliance Program
• FFIEC BSA/AML Manual – Trust and Asset Management
• FFIEC BSA/AML Manual – Customer Due Diligence
• FFIEC BSA/AML Manual – Beneficial Ownership for Legal Entity Customers
• Federal Register: Compliance Requirements  
• FinCEN FAQ – Customer Due Diligence (July 2016)
• FinCEN FAQ – Customer Due Diligence (April 2018)
• FinCEN FAQ – Customer Due Diligence (August 2020)

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