There is no doubt that the year 2020 is strange and maybe even frightening to many people. It seems there is no end to the bizarre events being reported from the pandemic to wildfires and murder hornets. However, as time goes on the “new normal” is settling in. Humans are resilient, and difficult times that require change is not foreign to the financial services industry. Whether the timing is coincidental or intentional, FinCEN and federal regulatory agencies have been increasingly transparent in the first three quarters of 2020.
The Federal Financial Institution Examination Council (FFIEC) released phase one of several updates to the BSA Examination Manual, clarifying certain aspects of regulatory expectation, specifically to the risk-based focus of an institutions BSA/AML program. Additionally, FinCEN has released three recent COVID-19 related fraud advisories and red flags, and a regulatory joint statement regarding customer due diligence on Politically Exposed Persons (PEPs). This frequency of communication to the financial services industry is abnormal to say the least.
Regulatory agencies understand that these are different times and are prepared to be more flexible in their examination. The pandemic does not give an institution an excuse for systemic deficiencies in their BSA/AML program, but a few technical findings during an examination does not mean that the regulator will go straight to a Matter Requiring Attention (MRA). Early communication with your regulator is key to understanding the struggles and successes of managing a BSA/AML program during a global pandemic.