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Is Outsourcing Transaction Monitoring the Best Option?

Our bank currently has BSA/AML transaction monitoring software and a staff of analysts but we are considering outsourcing this function. How do you suggest we determine if outsourcing the transaction monitoring function is the best option for our bank?

First, it is essential that you calculate the cost of your BSA/AML compliance program in hard and soft dollars. Keep in mind the real cost is not as simple as the sum of your employee's salary compared to the cost of purchasing software or an outsource solution. You must consider many factors including IT involvement, employee turnover and opportunity costs. In terms of opportunity costs, consider many other tasks that your staff could be focusing their attention and increasing productivity in those areas. If you are considering hiring additional staff you now may not need to. Also consider the new employee's salary, benefits, 401K, vacation time, etc. Once the cost of your BSA/AML compliance department is fully understood, determine the cost of outsourcing your transaction monitoring function. Even if the cost is equal to or more expensive, is BSA/AML transaction monitoring worth your bank's time and effort? As previously stated, your employee's time may be better used in other areas of compliance. Banks usually decide to outsource their BSA/AML transaction monitoring to better stay in compliance with the regulators, to redeploy their existing staff to other areas of compliance, or to free up the compliance officer's time.

First published on 02/10/2014

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