United States

Regulators encourage collaboration of BSA resources

AML AND COMPLIANCE NEWS  | 

Federal depository institution regulators encourage collaboration agreements between banks, savings associations, credit unions and foreign banks in order to pool human, technological or other resources to manage their Bank Secrecy Act (BSA) and anti-money laundering (AML) obligations more efficiently and effectively.

On Oct. 3, 2018, the federal depository institution regulators released an interagency statement on sharing BSA resources between financial institutions. The joint statement encourages collaboration agreements between banks, savings associations, credit unions and foreign banks in order to pool human, technological or other resources to manage their BSA and AML obligations more efficiently and effectively. A collaborative agreement would involve two or more banks agreeing to pool resources to achieve a common goal. Though the federal depository institutions’ regulators are encouraging collaborative agreements between financial institutions, the joint statement only encourages those institutions with a community focus, fewer complex operations, and lower-risk profiles for money laundering or terrorist financing based on a risk assessment to explore collaborative agreements. Institutions with these characteristics are well-suited for such arrangements. Financial savings and access to specialized expertise are some of the benefits that can be gained from these arrangements. The statement makes it clear that it does not apply to collaborative arrangements or consortia formed for the purpose of sharing information under section 314(a) of the Patriot Act or that entering into a collaborative agreement as described in the statement does not create an association between the two banks for purposes of section 314(b) of the Patriot Act.

Financial institutions should consider the risks and benefits of entering into a collaborative agreement and follow the same due diligence process performed when a third party is given customer and confidential information. Oversight processes should include periodic reporting to senior management and the board of directors on the effectiveness of the pooled resources.