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#350370 - 04/22/05 04:55 PM Exam Inconsistencies
Banker X Offline
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Joined: May 2003
Posts: 28
CA
Double standards? Rogue examiners? A monster with two heads?


From ABA's newsletter today.

As part of our ongoing effort to achieve consistency in the examination process, the ABA is compiling information from our members on how the banking agencies are implementing the changes to the Bank Secrecy Act/USA PATRIOT Act and other relevant laws during examinations. There has been a plethora of examples in the past year of dramatic exam inconsistencies and ABA has shared those problems with the Bank Secrecy Act Advisory Group Subcommittee on Examinations.

We learned this week that a bank was told by a lead examiner that the agency "absolutely confirmed that his examining team has been instructed to take a zero-tolerance approach with their banks on BSA."


From the Memo signed by all regualtory agency and Fincen (it's got real signatures - you can read it here.

At the same time, we wish to stress that the approach of the FBAs or FinCEN is not one of "zero
tolerance." To the contrary, we continue to expect examiners to use sound judgment in conducting
supervisory assessments of compliance and in recommending corrective action. We note that, in keeping
with longstanding practice, each FBA has processes in place for review of examiner findings and
recommendations for enforcement actions to ensure consistent supervisory responses to identified
problems.

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#350371 - 04/23/05 02:25 PM Re: Exam Inconsistencies
rlcarey Online
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rlcarey
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Posts: 83,226
Galveston, TX
If you are subject to such an event that goes against what you think is a fair and balanced approach by the field examiners - contact John Byrne at the ABA - they want to know so they can anonymously use the example when dealing with the agency's top brass.
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#350372 - 04/23/05 05:04 PM Re: Exam Inconsistencies
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
... and consider taking a proactive stance on getting the exam report's language brought under control. As has been said many times before, banks often do themselves (and other bankers) a disservice by refusing to plea their cases within the appeals process established by each of the federal regulators. Of course, you must pick your battles, since it's never a good idea always to be at loggerheads with examiners. But when you are convinced that an exam report is in error and the stakes are significant enough to fight over, follow the process.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

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#350373 - 04/23/05 05:42 PM Re: Exam Inconsistencies
Princess Romeo Offline

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Princess Romeo
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Posts: 8,272
Where the heart is
Be careful what you say on this open forum. Examiners read it also. It may have contributed to what happened to me at the exam exit.

Let's just say that right now, I am completely discouraged.
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CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

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#350374 - 04/23/05 10:47 PM Re: Exam Inconsistencies
Banker X Offline
Junior Member
Joined: May 2003
Posts: 28
CA
Quote:


We learned this week that a bank was told by a lead examiner that the agency "absolutely confirmed that his examining team has been instructed to take a zero-tolerance approach with their banks on BSA."





You can submit your latest BSA examination experience like the one above here.

WE NEED TO SUPPORT JOHN BYRNE!!

As an FYI, did you know there were about a dozen C&D's issued for Y2K violations. And guess what happened to those banks on January 1, 2000? Fortunately, Y2K had an ending - the standard for BSA examination keeps escalating and nobody seems to know how much is enough.

Bonnie, thank you for your concern but I'm an ex-banker. And I hope they can't subpeona BOL for user info, IP address, etc.

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#350375 - 04/24/05 11:14 AM Re: Exam Inconsistencies
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Some examiners do read BOL. So do some of the folks from FinCEN. The correct response to that is that any anecdotes advanced here should be accurate and be prefaced by an attempt to fully understand any citation to authority that an examiner has given as well as any perspective clearly labeled as opinion.

Nevertheless, there are anecdotes aplenty to demonstrate that the examination process is inconsistent and that examiners' personal opinions are being offered on the same plane as citations to authority. The dilemma is that many examiner statements do not appear in the written reports of examination, but are taken as the gospel by the bankers who heard them. In addition, when bankers do seek the help of the ABA they are reluctant to be named to the agencies. Thus, the agencies can shrug (as they did en masse) in the letter linked above and say, "There is no tangible evidence that this is happening."

Whether the fear of reprisals is legitimate, it exists. Currently, most banks just "cave" in the face of an errant criticism, fearful that any victory would be Pyrrhic. However, they are slowly beginning to realize that the potential for a second BSA criticism on the same point in a subsequent exam can bring disastrous consequences; they are beginning to comprehend that surrendering to an errant criticism is the foolish decision, not the judicious one.
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#350376 - 04/24/05 07:39 PM Re: Exam Inconsistencies
Anonymous
Unregistered

Quote:

... and consider taking a proactive stance on getting the exam report's language brought under control. As has been said many times before, banks often do themselves (and other bankers) a disservice by refusing to plea their cases within the appeals process established by each of the federal regulators. Of course, you must pick your battles, since it's never a good idea always to be at loggerheads with examiners. But when you are convinced that an exam report is in error and the stakes are significant enough to fight over, follow the process.




This is good advice. The problem is that much of the examiners' BSA/AML/PATRIOT suggestions and criticisms can intentionally be kept under the radar by the examiners. They present a memorandum with bullet points before they leave, and if you agree to readily "correct" certain things, then they tell you they'll "leave it out of the report", as though they're doing you a favor. But when the report comes, your Compliance rating of "1" is still downgraded to a "2", and they're obviously using the "out of report" stuff as part of an overall effort to downgrade the Compliance rating to a "2"...or worse. The whole process has become abusive and arbitrary. There just are no BSA/AML examination standards whatsoever.

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#350377 - 04/24/05 08:59 PM Re: Exam Inconsistencies
Sisyphus Offline
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Sisyphus
Joined: Jun 2004
Posts: 214
Connecticut
Quote:

Quote:

. But when the report comes, your Compliance rating of "1" is still downgraded to a "2", and they're obviously using the "out of report" stuff as part of an overall effort to downgrade the Compliance rating to a "2"...or worse. The whole process has become abusive and arbitrary. There just are no BSA/AML examination standards whatsoever.




Are you seeing the Compliance rating affected by the BSA/AML Exam results? Usually, the BSA/AML exams are part of safety & soundness exams (at least for FDIC banks) and go towards that overall rating.
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Michele A. Johnson, Compliance Manager Integrated Compliance Solutions, LLC

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#350378 - 04/24/05 10:39 PM Re: Exam Inconsistencies
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Posts: 21,293
The OCC is carrying the BSA results over to compliance, even when they have not reviewed compliance. So you can get a reduced rating on something they did not review. It is incredible and well worth taking up the ladder.
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#350379 - 04/25/05 06:37 AM Re: Exam Inconsistencies
Princess Romeo Offline

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Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
Quote:

The OCC is carrying the BSA results over to compliance, even when they have not reviewed compliance. So you can get a reduced rating on something they did not review. It is incredible and well worth taking up the ladder.




And the ironic aspect is... BSA has NOTHING to do with Consumer Compliance.

Even more ironic is that the regulators will insist for many banks that they must have a BSA Officer that is separate from Compliance. Heck - they don't even want to see BSA reporting to Compliance! Yet they lump the BSA rating in with Consumer Compliance.

So you could have the best Consumer Compliance program on the planet, but if you have some hiccups in BSA (and mind you.. BSA should not be reporting to Compliance), then your Compliance rating suffers.

Who says life should be fair?
_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

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#350380 - 04/25/05 10:34 AM Re: Exam Inconsistencies
Sisyphus Offline
100 Club
Sisyphus
Joined: Jun 2004
Posts: 214
Connecticut
Which regulator does not want BSA reporting to compliance?
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Michele A. Johnson, Compliance Manager Integrated Compliance Solutions, LLC

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#350381 - 04/25/05 03:53 PM Re: Exam Inconsistencies
Princess Romeo Offline

Power Poster
Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
OCC
_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

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#350382 - 04/25/05 05:21 PM Re: Exam Inconsistencies
Angel Eyes Offline
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Angel Eyes
Joined: May 2001
Posts: 4,599
Just finished our Compliance Exam, with 95% of the exam focused on BSA. A passing glance (about 5% of the exam) was taken for Flood, TIL, RESPA, etc.
We are also an OCC bank.

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#350383 - 04/25/05 06:31 PM Re: Exam Inconsistencies
RR Joker Offline
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RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
The FED and last I knew, FDIC, still looked at BSA, etc ONLY under the S&S exam. We just finished with both...BSA critisizm had no affect whatsoever on our Compliance rating.
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