BSA Compliance Practice exam

The requirement for a credit union under the Bank Secrecy Act (BSA) is to establish an anti-money laundering (AML) program. This program is critical because it helps financial institutions, including credit unions, to detect and prevent potential money laundering activities and other financial crimes. An effective AML program includes policies and procedures designed to identify, manage, and mitigate the risk of money laundering and terrorist financing.

Establishing an AML program involves several components, including but not limited to:

1. Risk assessment: Identifying and analyzing the money laundering risks associated with the credit union's operations and client base.

2. Customer due diligence: Implementing processes to know and verify the identities of members, which is essential for monitoring transactions for suspicious activity.

3. Reporting: Ensuring that the credit union can effectively report suspicious activities and file necessary reports with the Financial Crimes Enforcement Network (FinCEN).

4. Training: Providing ongoing training for staff about potential risks and how to recognize and deal with suspicious situations.

Understanding and complying with these requirements is vital for credit unions to fulfill their legal obligations and to safeguard against becoming vehicles for illicit activity.

In contrast, offering high-interest loans, auditing IT systems frequently, and serving only members are operational or business decisions that