Transitioning References from BSA (Back Secrecy Act) to CFT (Countering the Financing of Terrorism)
Since it was enacted in 1970, the BSA has sought to combat money laundering and the financing of terrorism by requiring financial transparency and the detection and prohibition of activities that misuse the U.S. financial system to move funds for illicit purposes.
Although the Anti-Money Laundering Act of 2020 (the AML Act) modified the BSA to require financial institutions to have in place risk-based programs with stringent recordkeeping, the AML Act did not change the goals or expectation of compliance with BSA. However, the FDIC now uses the term AML/CFT rather than BSA/AML for consistency with wording in the AML Act.
While there are no current requirements to update policies, procedures and standards to reflect the preferred reference, bank leadership should consider these changes as resources allow.
Revised Community Reinvestment Act (CRA)
The CRA was enacted in 1977 to prevent redlining, expand financial access and inclusion, and encourage banks and savings associations to meet the credit needs of all segments of the communities they serve, with particular focus on low- and moderate-income (LMI) neighborhoods and individuals.
In October 2023, a final rule issued by the Federal Reserve Board, FDIC and OCC modernized and strengthened CRA regulations to adopt more objective, data driven techniques to better understand, evaluate and incentivize lending and investments in LMI communities. Rollout of the new features begins on April 1, 2024 and includes:
- Adapting to changes in the banking industry and evaluating lending beyond traditional branch and ATM activities to include digital delivery channels such as online and mobile banking, branchless banking and hybrid banking models.
- Applying CRA regulations with greater clarity and consistency including a new metrics-based evaluation of retail lending and community development financing based on peer and demographic benchmarks for deeper insight into performance.
- Clarifying eligible CRA activities, such as affordable housing, that are focused on LMI, underserved, native and rural communities.
- Reducing compliance burdens with CRA evaluations and data collection customized to bank size and business model. For instance, banks with assets under $2 billion are exempt from new data requirements.
Click here for more details > https://www.federalreserve.gov/aboutthefed/boardmeetings/files/cra-key-objectives-20231024.pdf
Have more questions? Rehmann advisors are uniquely experienced and qualified to help your bank leadership navigate regulatory and compliance requirements. For more information, contact Beth Behrend at [email protected] or (616) 975-2823.
