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Starting with our "Welcome aBoard" post, our weekly blog addresses issues and topics of interest for Montana credit union board members. 

Asleep at the Wheel

by Tracy Thornburg, MCUN

I’m shaking my head…is everyone asleep at the wheel these days? Another financial institution was fined $4.5 million dollars for violating the Bank Secrecy Act (see the related link below). This seems to be an everyday occurrence. How, in this day and age, can financial institutions still be getting civil money penalties for BSA violations for inadequate internal controls, audits, training, and not having a designated BSA officer to oversee their compliance program?


It’s vital that the board stay informed, devote adequate resources, and set the proper tone for compliance within your credit union.


It is important as board members that you understand your responsibilities. At least once a year, you should receive formal BSA training. We’ve created a Compliance Training Tools webpage that houses recorded BSA webinars for both volunteers and staff. As a member of the board, you need to stay abreast of your credit union's progress and understand what is working and not working when it comes to BSA compliance. Review your credit union’s BSA policy too.

Some credit unions want to jump in and offer the same products and services that their competitors offer, but overlook the BSA-related risks involved. NCUA clearly expects each credit union to perform a risk assessment of its products, services, geographic locations, and field of membership -- including any new additions in these areas before you implement them. More often than not, a credit union will find it necessary to develop controls and update its procedures and systems after evaluating new products and services and the risks they involve.

One of the board's many responsibilities is to allocate appropriate resources for BSA compliance. But what does that really mean? It means make sure to provide adequate compliance staff, training, computer and software systems, as well as sufficient financial resources. Yes, financial resources -- think of it as a cost of doing business!

Money launderers and other criminals are always devising new ways to beat the system. With adequate resources, staff can monitor the effectiveness of your credit union's delivery channels, products, and services, so you are not caught off guard. Having a gap in procedures pointed out by examiners or the credit union publicly exposed as having facilitated money laundering is the last thing that anybody wants.

The board and staff at the credit union should strive to identify and correct potential weaknesses before others do. Don’t be fooled into thinking it can’t happen at your credit union or in your town, because it can … and, if fraudsters have their way -- it will. The compliance officer at your credit union should report any suspicious activity and identify any problem areas with BSA compliance at every meeting. If there is nothing to report, it should be duly noted in the board minutes.

It can seem less important when there are a multitude of other issues facing the credit union, but compliance is critical. It begins and ends with the board of directors. It’s vital that the board stay informed, devote adequate resources, and set the proper tone for compliance within your credit union. And, remember, for any questions or issues that arise, I am always available to help.

Tracy Thornburg is the Director of Compliance Services for the Montana Credit Union Network. She welcomes any questions or comments on this material or other compliance matters. Just email Tracy or call her at 406.324.7455.

RELATED RESOURCES

Below, you'll find links to past blog posts organized (loosely) into four categories. Feel free to browse. The blogs are all fairly short and provide food for thought in the areas of directors' duties and responsibilities, advocacy, working with the CEO, and ideas for strategic planning.

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