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BOARD OF GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

WASHINGTON, D.C. 20551

DIVISION OF SUPERVISION

AND REGULATION

SR 19-11

July 22, 2019

Revised July 24, 2019

On July 24, 2019, the Joint Statement on Risk-Focused Bank Secrecy Act/Anti-Money 

Laundering Supervision was revised. Footnote 9 was updated to 31 C.F.R § 1020.210(b)(5).

TO THE OFFICER IN CHARGE OF SUPERVISION

 AT EACH FEDERAL RESERVE BANK

SUBJECT: Joint Statement on Risk-Focused Bank Secrecy Act/Anti-Money Laundering 

Supervision

Applicability: This guidance applies to all financial institutions supervised by the Federal 

Reserve that are subject to the Bank Secrecy Act.

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance

Corporation, the National Credit Union Administration, and the Office of the Comptroller of the 

Currency (collectively, the federal banking agencies) and the U.S Department of the Treasury’s 

Financial Crimes Enforcement Network (FinCEN) are issuing the attached joint statement to 

emphasize their risk-focused approach to examinations of banks’ Bank Secrecy Act/anti-money 

laundering (BSA/AML) compliance programs.

The statement is intended to improve the transparency in the federal banking agencies’

risk-focused approach for planning and performing BSA/AML examinations and does not 

establish new legal or regulatory requirements, nor does it establish new supervisory 

expectations. 

As explained in the attached joint statement, federal banking agency examiners evaluate 

the adequacy of a bank’s BSA/AML compliance program relative to its risk profile as well as 

compliance with applicable laws and regulations. Examiners review risk management practices 

to evaluate and assess whether a bank has developed and implemented effective processes to 

identify, measure, monitor, and control risks. The federal banking agencies and FinCEN 

recognize that banks vary in focus1 and complexity and that these differences create for each 

bank a unique risk profile. Accordingly, the scope of each BSA/AML examination varies by 

 1 For example, a bank with a localized community focus likely has a stable, known customer base. 
 

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bank. Federal banking agency examiners conduct risk-focused BSA/AML examinations, and 

tailor examination plans and procedures based on the risk profile of each bank. 

Federal Reserve Banks are asked to distribute this letter to the supervised institutions in 

their districts and to appropriate supervisory staff. Questions regarding this letter should be 

directed to the following individuals: 

• Division of Supervision and Regulation: Koko Ives, Manager, BSA/AML

Compliance Section, at (202) 973-6163 or Jennifer White, Lead Financial Institution 

and Policy Analyst, at (202) 452-3964; or

• Legal Division: Jason Gonzalez, Senior Special Counsel, at (202) 452-3275. 

In addition, supervised organizations may send questions via the Board’s public website.2

Michael S. Gibson

Director

Attachment:

• Joint Statement on Risk-Focused Bank Secrecy Act/Anti-Money Laundering Supervision

[Note: On July 24, 2019, the attachment was revised. Footnote 9 was updated to 

31 C.F.R § 1020.210(b)(5).]

 2 See, http://www.federalreserve.gov/apps/contactus/feedback.aspx
Board of Governors of the Federal Reserve System

Federal Deposit Insurance Corporation

Financial Crimes Enforcement Network

National Credit Union Administration

Office of the Comptroller of the Currency

Joint Statement on Risk-Focused Bank Secrecy Act/Anti-Money Laundering Supervision

July 22, 2019

Introduction

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the 

National Credit Union Administration, the Office of the Comptroller of the Currency (collectively, the 

federal banking agencies), and the U.S. Department of the Treasury’s Financial Crimes Enforcement 

Network (FinCEN) are issuing this joint statement to emphasize their risk-focused approach to 

examinations of banks’ Bank Secrecy Act1

/anti-money laundering (BSA/AML) compliance programs. 

This statement is being issued as part of a broader effort to reinforce and enhance the effectiveness and 

efficiency of the BSA/AML regime.2 This statement is intended to improve transparency into the riskfocused approach used for planning and performing BSA/AML examinations and does not establish new 

requirements. Further, this statement aligns with the federal banking agencies’ long-standing practices for 

risk-focused safety and soundness examinations.3 

Under existing statutory requirements, specifically section 8(s) of the Federal Deposit Insurance Act and 

section 206 of the Federal Credit Union Act, the federal banking agencies have prescribed regulations 

requiring each bank4 to establish and maintain procedures reasonably designed to assure and monitor

compliance with the requirements of the BSA (collectively, these procedures form the basis of each 

bank’s “BSA/AML compliance program”).5 In addition, pursuant to these statutes, the federal banking 

agencies review banks’ BSA/AML compliance programs during each examination cycle.6 

BSA/AML Compliance Programs and Risk Profiles

To assure that BSA/AML compliance programs are reasonably designed to meet the requirements of the 

BSA, banks structure their compliance programs to be risk-based and to identify and report potential 

money laundering, terrorist financing, and other illicit financial activity. A risk-based compliance 

program enables a bank to allocate compliance resources commensurate with its risk. A bank’s welldeveloped risk assessment is a critical part of sound risk management and assists examiners in 

 1 As stated in 31 USC § 5311, the purpose of the BSA is to require certain reports or records where they have a high degree of 

usefulness in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence 

activities, including analysis, to protect against international terrorism. 2 See, for example, the October 3, 2018, Interagency Statement on Sharing Bank Secrecy Act Resources and the December 3, 

2018, Joint Statement on Innovative Efforts to Combat Money Laundering and Terrorist Financing, issued by the federal 

banking agencies and FinCEN.

3 See, for example, the November 27, 2018, Federal Financial Institutions Examination Council press release emphasizing riskfocused supervision at https://www.ffiec.gov/press/pr112718.htm. 4 Under the BSA the term “bank” is defined in 31 CFR 1010.100(d) and includes each agent, agency, branch or office within 

the United States of banks, savings associations, credit unions, and foreign banks. 

5 12 USC § 1818(s); 12 USC § 1786(q).

6 12 USC § 1818(s)(2); 12 USC § 1786(q)(2). 
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understanding the bank’s risk profile. Banks determine the levels and types of risks that they will 

assume.7 Banks that operate in compliance with applicable law, properly manage customer relationships 

and effectively mitigate risks by implementing controls commensurate with those risks are neither 

prohibited nor discouraged from providing banking services.

8

 As the federal banking agencies have 

previously stated, banks are encouraged to manage customer relationships and mitigate risks based on 

customer relationships rather than declining to provide banking services to entire categories of 

customers.9

 

Federal banking agency examiners evaluate the adequacy of a bank’s BSA/AML compliance program 

relative to its risk profile, and that bank’s compliance with applicable laws and regulations. Examiners 

review risk management practices to evaluate and assess whether a bank has developed and implemented 

effective processes to identify, measure, monitor, and control risks. The federal banking agencies and 

FinCEN recognize that banks vary in focus10 and complexity, and that these differences create for each 

bank a unique risk profile. Accordingly, the scope of BSA/AML examinations varies by bank. 

Risk-Focused Examinations

The federal banking agencies conduct risk-focused BSA/AML examinations, and tailor examination plans 

and procedures based on the risk profile of each bank. Common practices for assessing the bank’s risk 

profile include:

• leveraging available information, including the bank’s BSA/AML risk assessment, independent 

testing or audits, analyses and conclusions from previous examinations, and other information 

available through the off-site monitoring process or a request letter to the bank,

• contacting banks between examinations or prior to finalizing the scope of an examination, and

• considering the bank’s ability to identify, measure, monitor and control risks.

The information gained from assessing the bank’s risk profile assists examiners in scoping and planning 

the examination and initially evaluating the adequacy of the BSA/AML compliance program. The federal 

banking agencies generally allocate more resources to higher-risk areas, and fewer resources to lower-risk 

areas. For example, the pre-examination request list is tailored to the bank’s risk profile, complexity, and 

planned examination scope. Examiners review a bank’s BSA/AML risk assessment and independent 

testing to assess the bank’s ability to identify, measure, monitor, and control risks. Risk assessments and 

independent testing that properly consider and test all risk areas (including products, services, customers, 

and the geographic locations in which the bank operates and conducts business) are used in determining

the examination procedures and transaction testing that should be performed. 

 7 Bank directors provide guidance regarding acceptable risk exposure levels and corresponding policies while management 

implements policies, procedures, and practices that translate the board’s goals, objectives, and risk limits into prudent operating 

standards.

8 This statement does not create additional requirements or supervisory expectations for banks.

9 However, banks must still comply with the BSA including 31 C.F.R. § 1020.210(b)(5) . 10 For example, a bank with a localized community focus likely has a stable, known customer base. 
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The risk-focused approach reflected in this statement forms the foundation for the information, 

instructions, and procedures communicated to examiners through the Federal Financial Institutions 

Examination Council BSA/AML Examination Manual.

11 

Conclusion

Risk-focused BSA/AML examinations consider a bank’s unique risk profile. Examiners use risk 

assessments and independent testing when planning and conducting examinations. Examiners assess the 

adequacy of a bank’s BSA/AML compliance program during each examination cycle. The extent of 

examination activities necessary to evaluate a bank’s BSA/AML compliance program generally depends

on a bank’s risk profile and the quality of its risk management processes to identify, measure, monitor,

and control risks, and to report potential money laundering, terrorist financing, and other illicit financial 

activity. 

 11 See the Federal Financial Institutions Examination Council Bank Secrecy Act/Anti-Money Laundering Examination Manual

(Manual) at https://bsaaml.ffiec.gov/manual. This statement emphasizes the risk-focused approach to BSA/AML supervision

that is based on the BSA/AML laws and regulations, and has long been embedded in the Manual.