I'm updating our BSA/AML Risk Assessment and I have an internal audit issue. During our last internal audit, our auditor indicated that we should be addressing the Red Flags listed in the BSA Examination manual. She wrote a finding regarding the Red Flags, listing several of the 'flags' and noting that the monitoring of these should be enhanced, even though it would require BSA software, which we are in the process of installing, or would not involve the core system (i.e. Safe Deposit Boxes) Now, our Audit Committee believes that we should address each of the manual's 'red flags' in our BSA Risk Assessment. Has anyone else dealt with the specific red flags in their Risk Assessments? Any recommendations?...

No. I address all the red flags in my BSA Policy.

(not as)newbsa, do you have a sub-section under your CIP section in your BSA policy with the Red Flag issues? It was my understanding that one needed a seperate Red Flag policy etc..

Just to avoid confusion, there are BSA Red Flags for money laundering and terrorist financing in Appendix F of the BSA Exam manual and then there are the Red Flag requirements for detecting and preventing Identity Theft that are included in the new FACT Act regulations. They are entirely separate.

Lis ... I am talking about the BSA Red Flags (which I do incorporate in my BSA/AML/CIP/OFAC policy)

not the ID Red Flags ... which you are correct ... would have to be a seperate deal.

The Appendix that Ted references has this preface:



It's a bit scary that your committee thinks this is the checklist of things you are supposed to look for. Like "red flags" listed in a variety of sources, it is a list of examples; i.e. it is only supposed to make bankers think about the variety of activities that may be suspicious. Assuming "If we look for these things we've got it covered" is a mistake.

We include a link to the red flags appendix from the BSA manual in our BSA policy as a reference to folks so they're aware of them. We also share the list with applicable staff during our BSA training sessions.

Thanks for everyone's input. I was referring to the Red Flags listed in Appendix F of the exam manual. I appreciate the confirmation of my thoughts on the subject. It will help my 'cause'!