Written by Bernadette Clair, Regulatory Compliance Counsel
The April issue of the NCUA Report is now available. This issue includes the following:
I want to highlight one of the articles –Region III’s Report Beware of Three Emerging BSA Risks. This article discusses three services increasingly offered by credit unions that can significantly increase BSA risk – money services businesses accounts, reloadable prepaid cards and remote deposit capture. For example, the article has this to say about the BSA risk related to remote deposit capture (RDC):
“A rapidly growing electronic service that credit unions are offering to business account members (and some individual account holders) is RDC service. RDC is an automated deposit transaction delivery system enabling members to scan items—typically checks—from remote locations and electronically transmit the electronic images or captured digital data to credit unions for posting and clearing. While only 503 federally insured credit unions currently offer RDC service, this figure represents a 42.5 percent increase from the end of 2011.
The potential use of this service as a way to launder money is a risk associated with RDC. In particular, inadequate internal controls necessary to manage the anti-money laundering risk posed by RDC activity and insufficient automated transaction monitoring systems are two common deficiencies identified in recent FinCEN enforcement actions.
Before offering RDC to members, credit union management must assess all of the risks associated with the service, including BSA compliance, and develop and implement policies and procedures to mitigate those risks. Credit unions should ensure that their transaction monitoring systems adequately capture, monitor and report suspicious activities occurring through remote deposit capture.”
The article also serves as a reminder to credit unions that BSA risk should be one of the areas addressed during the development of new products and services. From the conclusion of the article:
“In Region III, we have noticed that while management often addresses the financial, operational and legal risks in servicing new categories of members and offering new products and services, they may forget to include addressing BSA risks. When developing a new program or service, we recommend including the BSA Compliance Officer at the outset. This will prevent a lot of headaches when examiners come.” (my emphasis)
Takeaway: save yourself a headache and make sure evaluating BSA risk is incorporated into your credit union’s product and service development process if it isn’t already!
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