ABA Banking Journal
No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
SUBSCRIBE
ABA Banking Journal
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
No Result
View All Result
No Result
View All Result
ADVERTISEMENT
Home Compliance and Risk

Update Your BSA/AML Strategy to Align With Growth Trajectory

April 4, 2016
Reading Time: 3 mins read

By Carey Rome

A Bank Secrecy Act officer has a tough job. Stakeholders feel as though they’ve heard enough about BSA, so they rarely accept the reality that continued investment in anti-money laundering compliance is required—whether it’s related to a violation or not.

But following the global financial crisis, regulators have stepped up BSA/AML enforcement. All told, the U.S. government has levied more than $200 billion in fines against banks since the crisis for financial crimes ranging from money laundering to currency manipulation. And for the bank’s BSA officer, violations can spell career catastrophe, reputational risk and all eyes directed toward the compliance department.

BSA/AML strategy is all about decreasing risk and minimizing fraud. Fortunately, lower risk doesn’t necessarily equate decreased profits. To increase profits while decreasing risk, banks must proactively update their strategies to align with a growth trajectory.

Updating your BSA/AML strategy

Many bank executives I work with are currently dealing with a hodgepodge of regulatory policies. When regulations are issued, bank executives scramble to write a policy to respond to the rules. The result is a bank-by-bank, regulation-by-regulation patchwork of policies, akin to building additions onto a home until the structure is a barely navigable mess.

The first step to decode regulatory cobwebs into a coherent strategy is to determine your target customer. Once you’ve zeroed in on ideal customers, you can then divest riskier, less profitable relationships. This compliance strategy requires fewer risk management personnel while improving oversight, reducing risk, and improving profitability.

For example, there has been an automotive manufacturing boom in the southeastern U.S., with automakers from BMW to Nissan to Mercedes setting up shop. As a result, regional banks in the Southeast might designate automotive manufacturers as target customers.

By focusing on a customer type (manufacturing, say), bankers can better understand the nuances of their businesses, such as transaction trends and import/export activity. While the BSA officer at a bank targeting medical practitioners might sound the alarm over heavy import/export activity, the BSA officer at a bank serving automobile manufacturers would understand such activity is a business norm.

Balancing risk with growth

During an audit, regulators look to ensure that compliance specialists properly understand transaction activities and trends, particularly those associated with high-risk accounts. And as settlements have shown, enticing high-risk customers without regard to BSA compliance is an unsustainable business model that rapidly attracts regulators’ attention.

The key to avoiding this fate is to regularly screen for and divest risky lines of business that aren’t the bank’s forte. I suggest a 12-month rolling strategy with quarterly assessments to ensure you stay compliant. Don’t treat quarterly assessments as boxes to check. Instead, be diligent—shell corporations and pyramid schemes can look like real businesses and vice versa.

Refusing riskier business isn’t just a hedge against regulatory action; it’s also essential to profitability. Take JPMorgan Chase & Co., which realized that the costs of regulatory compliance rendered nearly 70 percent of accounts with less than $100,000 in deposits and investments unprofitable. After lending regulation compliance costs and weighing them against potential profits, JPMorgan decided instead to pursue high-value non-retail accounts.

Is this passing up money? Not at all. Because the bank’s strategy is to deepen existing investments rather than diversify its customer portfolio, it won’t need as many compliance specialists to manage divergent lines of business. Decreasing expenses is just as important as raising revenues to growing profits.

BSA officers must lead

Prior to opening new lines of business, everyone from the CEO to the compliance officers must fully understand the bank’s risk exposure.

But to build a serious case for maturing the BSA program, BSA officers must take the lead in developing and presenting a sound strategy. This plan should project risk and growth for the next three years, accompanied by a detailed 12-month strategy to decrease risk by homing in on target customers.

Revising your BSA/AML strategy to align with target customers is an essential and responsible part of growing while staying compliant. Banks that don’t keep up might find themselves up next in the regulatory hot seat or on the front page for the worst reasons.

Carey Rome is the founder and CEO of management consulting firm Cypress Resources.

ADVERTISEMENT
Tags: Anti-money launderingBank Secrecy ActDerisking
ShareTweetPin

Related Posts

CFPB launches ‘tip line’ to report on bureau employees

ABA, associations urge CFPB to rescind changes to adjudication process

Legal
June 13, 2025

ABA joined three associations in voicing support for a CFPB proposal to rescind a set of changes to the bureau’s rules that, among other things, gave its director authority to resolve adjudication hearings overseen by the agency.

Fifth Circuit grants ABA mandamus, vacates transfer order for second time

ABA, CBA support maintaining confidentiality of CFPB nonbank risk determinations

Compliance and Risk
June 12, 2025

The American Bankers Association, joined by the Consumer Bankers Association, expressed support for the Consumer Financial Protection Bureau’s proposal to maintain the confidentiality of decisions to exercise the agency’s supervisory authority over a nonbank entity that may pose...

ABA experts see reasons for optimism amid economic, regulatory uncertainty

ABA experts see reasons for optimism amid economic, regulatory uncertainty

Compliance and Risk
June 11, 2025

The Trump administration has rolled back a broad range of banking guidance and regulatory proposals made in the last few years, and while bankers are used to regulatory whiplash when administrations change, it is possible some of changes...

ABA’s Nichols: Banking sector seeing positive policy developments

ABA’s Nichols: Banking sector seeing positive policy developments

Compliance and Risk
June 11, 2025

The banking sector has seen many constructive, positive policy developments at the federal level so far this year, and top officials have expressed their willingness to work with and engage with bankers on those issues, ABA President and...

Report: Synthetic identity fraud on rise

ABA Fraudcast: Federal data points to need for united response to fraud

Compliance and Risk
June 11, 2025

Telecoms and Meta are avoiding addressing serious challenges. And it's time to set up a family password.

Fighting the Rise in Ransomware Attacks: The Value of Breaking Through Silos

Key questions and decisions bankers face in response to ransomware attacks

Cybersecurity
June 10, 2025

ABA has recently convened panel discussions and a simulation to highlight important challenges bankers will likely encounter.

NEWSBYTES

ABA, associations urge CFPB to rescind changes to adjudication process

June 13, 2025

ABA DataBank: May inflation cooler than expected, but still above Fed’s 2% target

June 13, 2025

Consumer sentiment rebounds in June

June 13, 2025

SPONSORED CONTENT

AI Compliance and Regulation: What Financial Institutions Need to Know

Unlocking Deposit Growth: How Financial Institutions Can Activate Data for Precision Cross-Sell

June 1, 2025
Choosing the Right Account Opening Platform: 10 Key Considerations for Long-Term Success

Choosing the Right Account Opening Platform: 10 Key Considerations for Long-Term Success

April 25, 2025
Outsourcing: Getting to Go/No-Go

Outsourcing: Getting to Go/No-Go

April 5, 2025
Six Payments Trends Driving the Future of Transactions

Six Payments Trends Driving the Future of Transactions

March 15, 2025

PODCASTS

Podcast: Old National’s Jim Ryan on the things that really matter

June 12, 2025

Podcast: What bankers need to know about ‘First Amendment audits’

June 5, 2025

Podcast: Accelerating banking for quick-service restaurants

May 8, 2025
ADVERTISEMENT

American Bankers Association
1333 New Hampshire Ave NW
Washington, DC 20036
1-800-BANKERS (800-226-5377)
www.aba.com
About ABA
Privacy Policy
Contact ABA

ABA Banking Journal
About ABA Banking Journal
Media Kit
Advertising
Subscribe

© 2025 American Bankers Association. All rights reserved.

No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive

© 2025 American Bankers Association. All rights reserved.