We do not have an internal auditor on staff and currently outsource this function to a local accounting firm. I noticed that BSA was on their annual audit schedule. Can this firm be used to do the required annual independent BSA audit? I wasn't sure if they would be considered truly independent.

I would think if they were certified as having BSA experience/knowledge they would serve that process. However, many general audit firms might not have the certification.

You already outsource your independent audit function to them so how could there be an independence issue? Unless they designed your BSA/AML program, I think you should be fine.

On the other hand, I would definetely ensure they have the qualifications to perform the BSA audit. Trust me, just because it's an accounting firm and might have a CPA or two on staff, doesn't mean they know anything about BSA/AML regulation. It's an entirely different beast.

Find out if they have auditors that either have a lot of banking experience or some kind of certification and ask what banks they have performed BSA audits for near you. You can always make a friendly call to their Compliance/BSA officer to inquire.