Examining institutions’ key needs in a BSA/AML lookback report

When faced with an impending BSA/AML investigation or regulatory enforcement action, financial institutions can benefit in many ways from a firm that: 

• Develops and executes procedures and processes for maintaining compliance with BSA/AML regulations, including transaction monitoring systems and training programs  
• Executes targeted audit procedures focused on the identification of potential risks and reportable transactions  
• Remediates enforcement actions and consent orders  
• Performs lookbacks on transaction activity  
• Evaluates the appropriateness of the BSA/AML policies and procedures  
• Verifies the consistency of documentation and reporting with regulatory requirements  
• Performs BSA/AML model validations to evaluate the integrity and efficiency of the model and the effectiveness of identifying risks in a timely and complete manner  
• Optimizes transaction monitoring system rules and parameters  
• Provides risk-based and job-specific training  

When it’s time for a BSA/AML lookback, institutions need to work with an integrated team of financial crimes and regulatory compliance specialists who have in-depth experience serving similar institutions.  BSA/AML related projects will be conducted using professionals with the following relevant certifications: 

• Certified Anti-Money Laundering Specialist (CAMS)  
• Certified Fraud Examiner (CFE)  
• Certified in Financial Forensics (CFF)  
• Certified Public Accountant (CPA)  

When conducting a BSA/AML lookback, it's crucial to engage a firm that employs a structured yet flexible methodology. A general approach typically involves a technology-driven strategy to mitigate unexpected outcomes. The process is commonly segmented into four distinct phases: 

Phase 1: Configuration – This initial phase involves close collaboration with the client to gather transaction data and other pertinent information for the transaction monitoring system. It also includes the customization of rules to align with the client's specific risk profile. 

Phase 2: Data ingestion – Following configuration, this phase entails the assimilation of all relevant data into the system and the execution of alert scenarios. It includes an assessment of the volume of alerts for unusual activities and an updated projection of the time required to complete the preliminary alert examination. 

Phase 3: Alert review – In this phase, alerts are reviewed, often grouped by customer to provide a comprehensive view of any unusual activities. Documentation of alert resolutions includes detailed justifications for either closing the alert or escalating it, thereby creating a thorough audit trail. 

Phase 4: Case review – This final phase involves a detailed investigation of all cases arising from the alert review to decide whether filing a Suspicious Activity Report (SAR) is warranted. Each case is thoroughly documented, ensuring a clear audit trail. Regular status reports are provided, detailing the number of cases examined, their current status, and the average time taken for investigation. Upon completion, a detailed report is furnished, encapsulating the methodology and findings of the lookback. 

While an experienced team and a proven methodology are critical components to a BSA/AML lookback engagement, technology is the engine that drives key factors such as efficiency, accuracy and scalability.  

With this in mind, we recommend focusing on using transaction monitoring systems to leverage a technology-led approach for each BSA/AML engagement with capabilities such as:  

• BSA/AML transaction monitoring rules library that identifies high-risk transactions – customized to each institution’s risk profile  
• Ability to build a bespoke transaction monitoring system that allows the engagement team to better identify red flags for potential money laundering with deeper insight 
• Extensive rule library of AML industry risk typologies with the ability to fine-tune rules and thresholds based on each institution’s risk profile and create unique rules from scratch with no code required  
• Out-of-the-box configuration to quickly load transaction and customer data safely and securely  
• Grouping of alerts and cases to enable more wholistic and efficient investigation  

The backbone of BSA/AML methodology is technology, project management and communication. A thorough and efficient investigation will allow organizations like yours to meet deadlines as well as achieve the results expected.