Mergers and BSA non compliance

Posted By: UTBPMOM

Mergers and BSA non compliance - 04/21/14 10:38 PM

Looking for information about who is responsible for BSA non- compliance is discovered during/after a merger. If you know ahead of time that some items in the BSA program are out of compliance or you find out after a merger how do you deal with possible late filings of CTR's, 314(a) searches etc.

Thinking we would contact FinCEN and let them know we found discrepancies and ask them what we should do.
Thank you
Posted By: Elwood P. Dowd

Re: Mergers and BSA non compliance - 04/22/14 12:34 PM

When you buy a bank you buy it's BSA program including any violations that might be incorporated there. Whatever problems existed in the acquired institution are now attributable to your bank.

My suggestion is that you perform a thorough, skeptical BSA examination in order to quantify the problem. After you know what you have, then contact your regulator with a game plan and submit it to them for their advance review. (It's not FinCEN that's going to be reviewing your efforts. Contacting them first could just annoy your regulator. Besides, at present FinCEN is in more of an "enforcement" mode than a "compliance" mode and I would not care to bare my throat to them.)

As an aside for the possible benefit of others, I know of a couple acquisitions where BSA problems discovered during due diligence made a significant impact on the transaction. In one, it was used as an argument to negotiate a lower price per share. In the other, it eliminated a competitive bidder because the regulator said its own BSA program was deficient and it lacked the expertise to fix the problems in the bank it wanted to acquire. When your bank finds out about BSA problems "after the fact" it's clear that someone messed up the due diligence part of the acquisition.