By Gina Ellis, CRCM
So maybe you have completed your procedures for beneficial ownership identification or maybe you are still working on those requirements. But don’t forget another critical part of the new regulation effective May 11, 2018, will require Bank Secrecy Act (BSA) policy changes and procedures for the new “fifth pillar” customer due diligence requirements.
While customer due diligence may not be “new” to your institution, you will now be required to develop and implement appropriate risk based procedures for conducting ongoing customer due diligence. This will include understanding the nature and purpose of all customer relationships in order to develop risk profiles, conduct ongoing monitoring activities and report suspicious activity when applicable. You will also be required to maintain and update customer information using this risk based approach.
Here are a few questions you might need to ponder while developing your customer due diligence program and policies.
What new information will you obtain from each customer at account opening to establish a risk rating and understand the nature and purpose of each customer relationship?
- Will the information you collect at account opening and your risk rating differ by bank product or type of customer; consumer or commercial, individual or entity?
- Will you use software to perform monitoring procedures to compare expected activity against actual transactional activity? Does your software utilize information from all business and product lines?
- Will you be able to develop risk ratings based on a customer’s entire relationship?
- Where and how will you document a base line description of the nature and purpose of the customer relationship?
- Who will be assigned responsibility for ongoing monitoring activities?
These are just a few of many questions that will need to be answered when expanding your BSA policy to include the fifth pillar requirements. You will also need to educate your board of directors and staff about these changes and, of course, training will be critical.
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