BSA Program Effectiveness During Crisis

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During the current crisis, questions have arisen regarding how to reduce the workload regarding transaction monitoring and other compliance-related tasks. The question, as simple as it might sound, may be more tailored to current human capital constraints than it is to compliance burden. This is likely due to the sudden shock to a compliance program given many financial institution’s contingency plans and restructuring of work for purposes of continuity and efficiency. Given this new reality, I wanted to share some of my thoughts and ideas around making efficient and effective use of a BSA Compliance System such as ours, SimpliRisk.

One strategy that may be easy to employ would be to consolidate your tasks into a periodic format and break away from daily task management procedures. Using the BSA Compliance function as an example, one quick way of doing this would be to consolidate your scans into a weekly or monthly review. This would allow the user to isolate and focus their time and effort towards a larger set of alerts and reviews,  breaking away from multitasking on a daily basis. Multitasking, in effect, has been deemed inefficient and ineffective for quite some time, and it gets worse the more stress we are under. More can be read on the topic of multitasking in articles such as this one from Entrepreneur.com.

Another exercise that can make things easier in the long run is to reduce your outputs by conducting qualitative and quantitative analysis on your rules set. To better explain qualitative data analysis, the compliance professional is using their own knowledge through analytical and critical thinking skills to determine the “quality” of rules or processes by assessing the outputs. An example of performing qualitative data analysis on settings within your transaction monitoring software would be to align your thresholds with your current BSA Risk Assessment. Its important to note that the crux of conducting qualitative analysis lies in the documentation of reasons for changes made, documenting findings that may affect how a compliance department might change the way things are done, and ultimately providing your professional logic and reasoning to the opinion formed during the research.

Alternatively, a quantitative data analysis approach to data relies specifically on fact through data, calculation and hard numbers to enhance analytical and critical thinking. For Example, transaction monitoring outputs can be measurable by comparing SAR and CTR Filing rates to transaction monitoring rules, corresponding alerts to front line reports that corroborate unusual activity, or legal order processing activities to past alert or high-risk monitoring activity. One might also consider applying statistical analysis to sample transaction data sets and deriving the sigma, then applying the sigma to determine thresholds that might be better indicators of potential risk. The important thing to note is that data and the quality therein are integral to conducting quantitative analysis.

Ultimately, the last thing a compliance officer should do is to shut off rules monitoring, especially during crisis. For a quick read of why turning off alerts within transaction monitoring software is a bad idea, take a read of the Assessment of Civil Money Penalty for Michael La Fontaine, formerly of U.S. Bank. Among other things, he was cited for “improperly capp(ing) the number of alerts generated by (the bank’s) automated transaction monitoring system,” and failure “to adequately staff the BSA compliance function.” Ultimately, Mr. LaFontaine was personally assessed a penalty of $450,000.

In conclusion, if your compliance department needs help in these uncertain times, reach out to us. We are here to assist in discussing and formulating any strategy you might have on reducing or consolidating compliance work as it pertains to our product. We can easily be reached via email at support@simplirisk.com.

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