Regional Bank BSA/AML Assessment

Project Overview

The engagement was designed to identify and remediate gaps before the scheduled FDIC examination, with a focus on transaction monitoring effectiveness and control testing.

The Challenge

The bank's internal audit function lacked specialized BSA/AML expertise, and the compliance team was uncertain about their readiness for regulatory scrutiny.

Pre-Exam Concerns

Transaction monitoring thresholds not validated
Look-back testing not performed
CTR/SAR filing procedures outdated

Operational Gaps

High-risk customer reviews backlogged
Beneficial ownership records incomplete
Board reporting lacked key metrics

The Strategy

We executed a risk-based assessment prioritizing areas most likely to draw regulatory attention:

Model Validation

Tested transaction monitoring system thresholds and rules against actual transaction patterns to identify calibration issues.

Transaction Testing

SAR narrative quality assessment

Customer Due Diligence

Beneficial ownership verification
Enhanced due diligence adequacy
Risk rating methodology review

Results

Zero regulatory findings at examination 47 controls tested and validated 12 policies updated to current standards High-risk customer backlog eliminated Enhanced board reporting with key risk indicators

Key Takeaway

Community banks face the same regulatory expectations as large institutions but often lack specialized compliance resources. Independent testing provides objective assurance and identifies gaps before they become examination findings or enforcement actions.