We are working on a process under which a commercial lender/underwriter can reach out to BSA if they identify that a customer's KYC profile is marked high-risk by BSA.

What questions could a commercial lending team ask with the vagueness BSA would have in their responses due to confidentiality rules? Commercial lending wants to employ a short form to reach out to the BSA team via email.

We were thinking something as simple as...

Is there any negative news that BSA has uncovered through their review process?
Does BSA have any lending concerns regarding this customer's relationship?

Responses would be made via phone, not written. BSA would simply say yes or no to the above questions. Does anyone have a process like this? It seems risky from a BSA side of things, but as the bank has run into issues twice now with lending to someone that BSA had previously noted negative news, the higher ups want a process put in place.

What questions could a commercial lending team ask with the vagueness BSA would have in their responses due to confidentiality rules?

What confidentiality rules? You mean has the BSA department filed a SAR on this customer? Other than that, any and all of the perceived AML/BSA risks and information should be able to be discussed and shared with frontline personnel. Otherwise, how in the world would they know what to be watching for to report back to the BSA department?

Correct. The BSA team can't flat out tell us, "they are high risk because we filed a SAR of them". They have to say, we are concerned with the customer's source of cash; they are high risk because they own a few ATMs, etc.... This may actually even be a good opportunity for BSA to ask questions that we can relay back to the customer as part of the process. Should benefit both teams.

What's a good way to ask the question on a form?

What are BSA's concerns with this customer?
Does BSA have any follow-up questions?

Does this customer present a BSA Risk that would be of concern to the Commercial Lending team?
Does BSA need any questions answered from customer before proceeding?

are you on the BSA side, or lending side?

BSA should be the one providing details around what they can/can't provide to you. Ask them to create that KYC or EDD procedure that gives your lenders/commercial bankers sufficient information to assess the risk of onboarding new clients. i would not relay back any information they provided to the prospective customer, that is a recipe for disaster.

This is a collab effort between both teams. I am on the BSA Side of things as one of the managers. We know what we can't provide, the problem is stepping around the rules.

We are requesting that they simply ask those two questions via email, the response by BSA to lending is made via phone call, and no documentation of the call retained by lending other than a... If the customer was high-risk by BSA; was BSA Contacted? Yes/No.

I really do not understand what the goal is here and why all the secrecy? You want who to ask those two questions and for what reason and when?

The goal here is to prevent a particular situation from happening again.

BSA team knew about negative news about 4-5 years ago and relayed that information on to lending. Lending team decided to continue to lend to the customer anyway. Customer was indicted and charged with bribery and other federal charges recently, assets seized, hindering his ability to repay. High ups want a process in place for lenders to be able to identify high risk customers and ask questions if BSA located information such as this.

The secrecy really is to avoid the appearance or temptation to overshare information as to why a customer is on our high risk list, such as having had a SAR filed in the past or transaction related concerns which could be inferred to have led to a SAR. Just trying to avoid the appearance is all.

You have a business to run - what do appearances have to do with anything. I am not sure how this is going to prevent anything if you previously told the business unit in the other case of issues and they just did want they wanted to do anyway. If you have a customer that is that high risk, then put a code on the system that says - NO NEW ACCOUNTS - refer to the BSA department for additional information, then they need sign off from the BSA department before they move forward.. Other than that, this is a giant waste of time.

I do not understand this. You shared adverse media and the lenders made a business decision, which turned out to be a poor credit decision. How is this your problem?

When we have serious adverse media and the business (Lending, Private Banking, Retail, etc). decides to continue doing business with that person, that would be their risk. Unless it's money laundering or something along those lines, our job is done. We have shared the risk with the appropriate personnel. If there are any major disagreements between the business and compliance risk, it goes to a Committee so everyone is informed and the minutes outline why a decision was made and any parameters that need to be followed.

With respect to sharing information - other anything SAR related, why would you not fully disclosure?

I really don't understand what the issue is?

I have not been in BSA for several years. BUT, I remember the penalties well, and the fines and reputational risks are HUGE.
IMHO, the loan officeres are putting the bank in Regulatory Jeopardy for their own gain, and to avoid emnarassment with their inability to say no or recognize a dangerous situation. Make sure bank management knows what it could cost (fines, attorneys fees, lookbacks and reputation) them if the DOJ decides to visit, and with the background, (and additional IRS agents) they may.

Seems like your lenders are not doing adequate due diligence if you have taken losses bases on negative news.

Why would BSA know more than them regarding negative news? If your lenders don't have the tools to do the due diligence, then why isn't BSA sharing what they find?

If you have had losses, it's because you have a total disconnect between departments of your bank.

Anything can be shared with the exception of SAR filings.

this sums it up perfectly

I think the OP should take this thread and show both teams and talk with management. Secrecy is important but only when needed. It seems like there are some barriers in your institution that are self made and really stopping you all from working together. I am in BSA and we do not have this type of discussions at my institution. When other departments want info we talk with them. When we want info from other departments we ask and that is the end of it. We don't bring up SARs while doing it and everyone should be on the same page. If I get the feeling they are not I ask and we work it out.

It may just need to be brought up when everyone has the ability to talk and ask questions.