We get asked this question frequently, and it comes down to the definition of banks and financial institutions in the Financial Crimes Enforcement Network’s (FinCEN’s) Bank Secrecy Act requirements under Regulation X.

Regulation X sets the groundwork for Bank Secrecy Act (BSA) requirements and applies to “financial institutions.” Financial institutions include among others, banks, brokers or dealers in securities, money service businesses, casinos, and persons subject to supervision by any state or Federal bank supervisory authority. “Bank” includes commercial and private banks or trust companies, credit unions, and any other organizations chartered under the banking laws of any state and subject to the supervision of the bank supervisory authorities of a state.

Thus, money service businesses, trust companies, and security dealers are all subject to the BSA requirements. In February 2024, FinCEN proposed including registered investment advisers, and exempt reporting advisers, to the list of financial institutions subject to the BSA requirements.

What should my BSA program consist of?

Among other things, compliant AML Programs will include the following:

• AML Risk Assessment
• Development of policies, procedures, and internal controls
• The designation of a compliance officer
• Employee training
• Know your customer program to include CIP and Customer Due Diligence (CDD) for purpose of developing customer risk profiles
• Ongoing Monitoring
  • Transaction Monitoring
  • Registration with FinCEN to E-File
  • Reporting Suspicious Activity (SARs)
  • Reporting CTRs, FBARs
• Independent testing

Where can I learn more?

Good sources of information are available at the Federal Financial Institutions Examination Council’s (FFIEC) BSA/AML Examination Manual: https://bsaaml.ffiec.gov/manual, and on FinCEN’s Website: https://www.fincen.gov/.

How can Compliance Services Group help me?

We can help you along every step of the way. From design and implementation of a BSA program to the required independent testing. Our auditors and consultants are well versed in BSA requirements and what it takes to pass examiner’s expectations.

Contact us to see how we can help.

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Please be advised that CSG provides financial services compliance audit and consulting services to our clients.  The services that we provide include certain tasks that may be characterized as “law-related services” under Rule 5.7 of the Rules of Professional Conduct governing lawyers.  Since some of our employees are lawyers with an active bar license but are NOT engaged in the private practice of law, that Rule requires us to make disclosures clarifying that the services we perform may be law-related services, but they are not legal services.  Because they are not legal services, those services and our relationship will not be governed by the Rules of Professional Conduct that guide the client-lawyer relationship, such as rules applicable to privileged communications and prohibitions of conflicts of interest.  Notwithstanding this disclaimer, we will continue to govern our relationship with you using reasonable ethical and professional standards that are expected to meet your expectations.