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#1842050 - 08/13/13 04:09 PM Outsourcing BSA transaction monitoring
BSA all the way Offline
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BSA all the way
Joined: Jan 2011
Posts: 74
I would love to hear from anyone who is currently doing this. Cost vs reward? thanks!
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BSA/AML/CIP/OFAC Forum
#1842080 - 08/13/13 04:44 PM Re: Outsourcing BSA transaction monitoring BSA all the way
BC78a Offline
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BC78a
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Send me a PM with your phone number, and I will contact you.


Paul
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#1842122 - 08/13/13 05:41 PM Re: Outsourcing BSA transaction monitoring BSA all the way
TryingtoComply Offline
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It would be nice to hear the pros and cons within the forum. I am also interested in this. smile
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#1849023 - 09/05/13 03:46 PM Re: Outsourcing BSA transaction monitoring BSA all the way
NanaK Offline
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Joined: Aug 2013
Posts: 51
Near the water
This is my first post on here! We are currently outsourcing, so I am looking for feedback as well. We are almost $1.5b and we have 21 branches. Up until last year, there were only 2 people in our BSA department. Now we have 1 1/2 in our BSA/Fraud department and we have outsourced the monitoring, SAR filing, 314a scans and they also scan our database against OFAC. We still file our CTRs--approx 200 a month. I could not get to everything, so this has been a real savior for me. HOWEVER, this is very new to the regulators and while they seemed pleased I had help, they were not totally satisfied with the whole process. After the exam was over, I was left feeling as though I needed to duplicate most of the outsourcing efforts. Does anyone have a really postive experience?

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#1849120 - 09/05/13 05:34 PM Re: Outsourcing BSA transaction monitoring NanaK
Al Miller Offline
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Al Miller
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Pleasanton CA USA
Welcome!! You will enjoy the group.

My prior bank is currently looking at oursourcing, but I have not experience other than the sales presentation.

Who is your regulator and what part of the country are you in?

Al
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#1849167 - 09/05/13 07:07 PM Re: Outsourcing BSA transaction monitoring BSA all the way
ACBbank Offline
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A number of my clients have discussed this, but the feedback from the regulators, primarily the OCC has been negative. I don't want to discuss in detail on the public forums, but could discuss in the private forums.
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#1849532 - 09/06/13 06:02 PM Re: Outsourcing BSA transaction monitoring BSA all the way
Princess Romeo Offline

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Funny because the NCUA seems to love it.

The issue with outsourcing comes down to this - you still have to be aware of what is going on so you need to stay in constant contact with your outsource providers. The temptation is just to let them "at it" and not pay attention. However, that is just as bad as a high level "BSA Officer" who is not involved in the day-to-day BSA operations and then never does any oversight on what the junior level employees are doing.

Look at "outsourcing" as simply an extension of your department - it will save you time in some areas, but you still need to devote time to oversight. The problem you'll run into is a management attitude that will want to add more c-rap to your plate that has nothing to do with BSA. I suspect this is what OCC, FDIC, and perhaps FRB find objectionable.
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#1849713 - 09/06/13 09:27 PM Re: Outsourcing BSA transaction monitoring Princess Romeo
NanaK Offline
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Joined: Aug 2013
Posts: 51
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FDIC's curiosity was peaked and they liked the concept. They just were uncomfortable with some of the reporting, for example, from the Verafin software. They'd always seen it "this way" from BAM. So, we spent a lot of time hashing through how the software did various things. How were we verifying the extracts from our core were properly uploading to Verafin? How did we know they were monitoring everything they were supposed to be monitoring? Did we trust the numbers in the reports with what was being reported to us? We had only been "live" for about a month when the examiners came. I spend time on a daily basis responding to emails from the company that does our outsourcing, verifying/reviewing information or answering questions just like they were employees in our department. In a sense, it is like our own BSA department--just located states away.

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#1849715 - 09/06/13 09:29 PM Re: Outsourcing BSA transaction monitoring Al Miller
NanaK Offline
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Thanks. We are in Louisiana and our regulator is FDIC.

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#1849735 - 09/06/13 09:45 PM Re: Outsourcing BSA transaction monitoring NanaK
WonderWoman Offline
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gone fishin'
Originally Posted By: NanaK
FDIC's curiosity was peaked and they liked the concept. They just were uncomfortable with some of the reporting, for example, from the Verafin software. They'd always seen it "this way" from BAM. So, we spent a lot of time hashing through how the software did various things. How were we verifying the extracts from our core were properly uploading to Verafin? How did we know they were monitoring everything they were supposed to be monitoring? Did we trust the numbers in the reports with what was being reported to us? We had only been "live" for about a month when the examiners came. I spend time on a daily basis responding to emails from the company that does our outsourcing, verifying/reviewing information or answering questions just like they were employees in our department. In a sense, it is like our own BSA department--just located states away.


You're going to have to do all that data validation with any software, regardless if it's outsourced or inhouse. It's the newest "hot topic" for regulators.
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#1849740 - 09/06/13 09:52 PM Re: Outsourcing BSA transaction monitoring BSA all the way
NanaK Offline
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Joined: Aug 2013
Posts: 51
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Ugh, I know. We had been using BAM, and it was so seamless for us. Our issue before outsourcing was that we were understaffed. I was filing up to 20 SARs a month, handling fraud and Reg. E, trying to monitor 130 high risk accounts monthly and up to 200 moderates quarterly, blah blah...keep up with 22 MSBs and about 22 exemptions. To say I was stressed was an understatement. Wow, that spewed fairly easily and all I was trying to say was data validation with BAM was much easier. Perhaps I am still recovering from the stress.

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#1849755 - 09/06/13 10:15 PM Re: Outsourcing BSA transaction monitoring BSA all the way
WonderWoman Offline
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gone fishin'
Your day sounds a lot like mine. I'm a Verafin user, feel free to PM me if you'd like smile
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#1849931 - 09/09/13 04:23 PM Re: Outsourcing BSA transaction monitoring Princess Romeo
ACBbank Offline
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ACBbank
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New York City
Originally Posted By: Princess Romeo
Funny because the NCUA seems to love it.

The issue with outsourcing comes down to this - you still have to be aware of what is going on so you need to stay in constant contact with your outsource providers. The temptation is just to let them "at it" and not pay attention. However, that is just as bad as a high level "BSA Officer" who is not involved in the day-to-day BSA operations and then never does any oversight on what the junior level employees are doing.

Look at "outsourcing" as simply an extension of your department - it will save you time in some areas, but you still need to devote time to oversight. The problem you'll run into is a management attitude that will want to add more c-rap to your plate that has nothing to do with BSA. I suspect this is what OCC, FDIC, and perhaps FRB find objectionable.


I'd be very curious as to the asset size of some of your clients? The regulators seemed to imply that this might be a way to avoid providing the appropriate resources to the BSA Department.
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#1849956 - 09/09/13 04:41 PM Re: Outsourcing BSA transaction monitoring BSA all the way
Xian Ngyuen Offline
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Joined: Aug 2013
Posts: 221
what specific components of transaction monitoring are being considered for outsourcing?

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#1850001 - 09/09/13 05:25 PM Re: Outsourcing BSA transaction monitoring ACBbank
Elwood P. Dowd Offline
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Quote:
The regulators seemed to imply that this might be a way to avoid providing the appropriate resources to the BSA Department.


Individual examiners or the agency itself?
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#1850021 - 09/09/13 05:49 PM Re: Outsourcing BSA transaction monitoring BSA all the way
ACBbank Offline
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ACBbank
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New York City
That's the million dollar question Ken. I've yet to see anything in writing on official letterhead. So I would opine that it's the individual examiners. However, multiple clients have gotten this feedback.
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#1850035 - 09/09/13 06:04 PM Re: Outsourcing BSA transaction monitoring ACBbank
Elwood P. Dowd Offline
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It's too short sighted a criticism to be attributable to an agency.

Assume it's theoretically possible that it's a "lazy man's solution to due diligence." If every bank had enough dollars to investigate customers individually, but chose this instead, that might be a valid criticism.

However, for many banks it's the only cost effective option. So, if they are not supposed to do this, it's okay if they just do nothing? Dumb.
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#1850051 - 09/09/13 06:29 PM Re: Outsourcing BSA transaction monitoring BSA all the way
ACBbank Offline
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New York City
Ken - All of my clients are above 25 billon in asset size. The regulators flat out expect that the FI's will spend money on AML Compliance (Staffing has been a reoccurring issue). Cost effective is not something we would bring up in a meeting, as it would not go over very well.
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#1850067 - 09/09/13 06:43 PM Re: Outsourcing BSA transaction monitoring ACBbank
Elwood P. Dowd Offline
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Deeper pockets spawn greater responsibilities, sigh. wink
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#1850107 - 09/09/13 07:17 PM Re: Outsourcing BSA transaction monitoring BSA all the way
ACBbank Offline
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New York City
smile I may borrow that line Ken.
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