BSA Reviews--Annual vs Bienniel

To say the least, I am confused. I am under the impression that we must perform a review of ALL exempt persons on an annual basis. I am also under the impression that we must perform a biennial review of non listed businesses and payroll customers.... Is that right? It appears that we will be duplicating the reviews...I must be missing something.

Any help out there?

The biennial requirement is the recertification of any Phase II exemptions you have. Each Phase II exemption is valid for the year in which you exempt the customer, and until March 15 of the second year following. Then you have to recertify by March 15 every other year to keep the exemption alive.

As part of the recertification, you will sign a statement that says you have reviewed the exempted customer's activity at least annually for suspicious activity, etc.

As for Phase I exemptions, you need to review them periodically (once a year seems appropriate unless something else triggers your review) to make sure the parties are still eligible for Phase I exemptions. So you check to make sure the company is still traded on a national exchange, etc., etc.

See 31 CFR 103.22(d)(4) & (5)(ii) for those requirements. AR.

You said: I am also under the impression that we must perform a biennial review of non listed businesses and payroll customers....

Biennial means every two years not every 6 months. Phase II exemptions must be renewed every 2 years but you should be reviewing them at least annually to ensure that they continue to meet the qualifications for exemption status and that no suspicious activities are going unnoticed.

Since it says "by March 15th" is there a problem with my sending them now while it is on my mind?

This is not spelled out by FinCEN. I say "go for it." It must be before 3/15 and this is before then.

Make sure you retain the documentation for the review. We've heard from several bankers that they were criticized in their Exam Reports, for not being able to prove that the review was done.

Also, if the review primarily relies on a listing of the customers' deposits, you will likely be cited for a violation of the BSA. (We've heard this complaint from several bankers. Most systems do not separate the cash and non-cash portions of a customer's deposit; they only record the total deposited amount. The BSA requires that you review the cash portion of each deposit.)

We have a system that can help with this. It also generates the exemption forms and helps you keep track of when biennial filings are due. Please give me a call if you'd like more information, or to see a demo via the Internet.

Regards,
Wayne Barnett, President
Wayne Barnett Software
www.barnettsoftware.com
877-945-4344
wbarnett@barnettsoftware.com

Kathy - Our regulator wanted to see evidence of enhanced due diligence reviews of our "high risk" customers (such as those who engage in money service businesses like check cashing). They expected to see reviews of exempt customers as well as those which do not regularly exceed a CTR reporting threshhold. Fortunately, we regularly investigate account activity to make sure what we see happening in an account is commensurate with our expectations and transactions of similarly situated customers. We were also able to show an investigation for a new local charity account to make sure everything looked OK. FYI and good luck!