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 As a small credit union, what are we expected to have in place regarding the Bank Secrecy Act (BSA)?
 To clarify, the rules and requirements are the same for all credit unions, regardless of the credit union’s size.
This is a timely topic, since state and federal examiners have made it abundantly clear that credit union examinations’ will consist of a thorough review of a credit union’s BSA program. The credit union’s BSA Program is required to have procedures covering the following four categories:
• Customer Identification Program (CIP)
• Suspicious Activity Reports (SAR)
• Currency Transaction Reports (CTR)
• Purchase of Monetary Instruments (Teller Checks, Cashier’s Checks, Money Orders)
Customer Identification Program. The credit union is required to have a CIP that is appropriate for its size and account opening practices. The CIP must include risk-based procedures for verifying the identity of each member and potential member. For individuals, the standard forms of identification, such as a driver’s license, state ID card or passport are appropriate. For non-natural persons (corporation, partnership, or trust), documents proving the existence of the entity, such as certified articles of incorporation, a government issued business license or a partnership agreement are appropriate measures of proof. Also, the Illinois Secretary of State’s Web site has a database for verifying corporations and LLC’s.
Suspicious Activity Reporting. All credit unions are required to file an SAR when the credit union: (1) suspects insider abuse involving any amount; (2) detects any known or suspected criminal violation, committed or attempted against the financial institution and involving or aggregating $5,000 or more in funds or other assets if the suspect can be identified; (3) detects violations aggregating $25,000 or more regardless of whether a suspect is known; (4) suspects a member is conducting a transaction of $5,000 or more with the intent to avoid Bank Secrecy Act reporting requirements; or (5) determines its computer system, and therefore member information, has been compromised. Please note that an SAR does not need to be filed for those robberies and burglaries that are reported to local law enforcement.
Currency Transaction Reporting. Credit unions are required to file a CTR (FinCEN Form 104) for each deposit, withdrawal, exchange of currency or other payment or transfer involving a cash transaction of more than $10,000.
Purchase of Teller checks, Cashier’s checks, money order and traveler checks. Credit unions that issue or sell the above instruments are required to maintain a record of certain member information when the instrument is purchased in cash for any amount between $3,000- $10,000. The following information should be maintained:
• Name of purchaser;
• Date of purchase;
• Type of instrument purchased;
• Serial number of each instrument purchased; and
• The dollar amount of each instrument purchased.
The common misconception among credit unions is: “We never have large cash transactions, why are we required to have a BSA Program?” The above list clarifies that the CTR requirement is only one quarter of the BSA program. As many credit unions continue expanding business lending and others are just now getting their feet wet in business lending, those businesses will need checking accounts. Businesses such as restaurants, bakeries and fast food chains typically deal in cash, so the reality of filling out a CTR may be just around the corner, while the other three components are a current reality, no matter the credit union’s size or product line.
For a BSA or CIP sample policy, or additional guidance, please contact Legal and Technical staff in the League’s Office of General Counsel.
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