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Background

The Bank Secrecy Act of 1970 (BSA or the Act) is intended to aid investigations into an array of criminal activities, from income tax evasion to money laundering. In recent years, the reports and records prescribed by the BSA have also been utilized as tools for investigating individuals suspected of engaging in illegal drug and terrorist financing activities.  

The USA Patriot Act was enacted by Congress in October 2001, in response to the September 11, 2001 terrorist attacks on the United States.   The USA PATRIOT Act established a host of new expanded reporting measures to prevent, detect, and prosecute those involved in money laundering and terrorist financing.  

Many community banks are concerned the time and cost associated with Bank Secrecy Act and Anti-Money Laundering requirements outweigh the benefits. Through the 2020 Community Bank Case Study Competition, CSBS seeks to learn how community banks have been meeting the Act’s requirements, understand the challenges smaller banks encounter in their efforts to comply with BSA requirements, and identify potential regulatory reforms. Participating teams will be asked to answer a series of questions that will guide them in their case study of a local bank of their choosing. Ultimately, CSBS intends to use the information received from these case studies to help inform policy makers. 


Questions - 2020 Community Bank Case Study Competition

PART I: FINANCIAL ANALYSIS 

Using the FFIEC 041/051 Call Report, Uniform Bank Performance Report (UBPR), and other publicly available data sources, students should analyze and provide a summary analysis of the following:   

  • Earnings Performance  
  • Loan Portfolio Composition, broken out by loan type (e.g. consumer loans, mortgage loans, etc.)  
  • Asset Growth  
  • Capital Levels   
  • Liquidity   

To facilitate uniform analyses amongst teams, this financial analysis should be completed on a year over year basis covering five years.   

 
PART II: BANK SECRECY ACT AND ANTI-MONEY LAUNDERING ACT (BSA/AML) COMPLIANCE ASSESSMENT 

(address the questions most pertinent to the institution) 

  1. What process, methods, and information does the bank utilize to conduct its BSA/AML risk assessment? 
  2. How many dedicated employees does the bank have for BSA/AML compliance? 
  3. What portion of the banks overall compliance costs are dedicated to BSA/AML?  Are there ways in which the bank has been able to reduce costs associated with BSA/AML compliance? 
  4. How is the bank’s BSA/AML compliance function structured to meet the Bank Secrecy Act requirements?
  5. Have there been any recent changes to the bank’s structure or approach to compliance? 
  6. What challenges does the institution face under the current BSA/AML compliance framework? 
 
PART III: TECHNOLOGY, INNOVATION, & COLLABORATION

 (address the questions most pertinent to the institution) 

  1. How has the institution used new or existing technology to meet BSA/AML requirements? What software does the bank currently use and why? How has this software assisted the bank in meeting BSA/AML requirements? What could the software better?
  2. In October 2018,  FinCEN and the federal banking agencies issued a joint statement explaining how community institutions with low-risk profiles could share BSA/AML resources in order to reduce compliance costs. Is the bank currently collaborating with any other financial institutions as part of their BSA compliance efforts? If not, would the bank be interested in exploring this further? 
  3. Does the bank have insights to share regarding their BSA-related interactions with local or state law enforcement, FinCEN, state and/or federal examiners?  
  4. Does the bank have any plans or ideas to change their BSA compliance methods through the use of innovative technologies or collaboration?  
 
PART IV: POLICY RECOMMENDATIONS & THE FUTURE OF BSA/AML REFORM 

(address all questions) 

  1. Are there areas where FinCEN and the regulators could be helpful in clarifying key components of the Act and compliance expectations? 
  2. Identify measures policymakers could take to: a) Modernize some of the Act's provisions; b) Reduce the burden of BSA/AML reporting; c) Improve the quality of information to meet the goals of the Act.
  3. How can FinCEN and law enforcement better inform the bank on the effectiveness of their SAR and CTR submissions? 
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