<img src="https://ws.zoominfo.com/pixel/pIUYSip8PKsGpxhxzC1V" width="1" height="1" style="display: none;">

BSA Meets Vendor Management

author Michael Berman
1 min read
Aug 24, 2016

How necessary is it to document your vendor selection process? If a new law in New York state is any indication, it’s becoming more and more important.

The New York Department of Financial Institutions recently published a new BSA/AML rule requiring greater board oversight of risk-based BSA/AML transaction programs. The rule came about after several foreign banks doing business in the state, including those based in Pakistan and South Korea, were hit with enforcement actions for falling short in their “anti-money laundering and sanctions compliance programs,” law firm Baker Botts writes. As is often the case with regulation, the misdeeds of a few resulted in new rules for every financial institution—foreign and domestic—in the state.

What does this have to do with vendor management? The new rule specifically requires that financial institutions using a third-party vendor for BSA/OFAC screens must have a “vendor selection process.”

This is yet another reminder of the growing importance of careful vendor selection and monitoring. When drafting new rules, regulators are giving greater attention to the role vendors play in helping an institution stay compliant—or miss the mark. They want to be sure financial institutions are taking full responsibility for their vendors.

Now is the time to review your institution’s third-party selection process, including efforts to monitor and verify vendor performance. It’s not enough to conduct diligence—you need to show regulators the steps you’ve taken to ensure vendors will live up to expectations.

Don’t wait until an examiner asks about vendor selection processes. Be proactive.

 

Related: Vendor Risk Countdown: Top 10 Risks Third-Party Vendors Pose to Your Financial Institution

Subscribe to the Nsight Blog

All Topics Risk & Compliance Product Insight Banks Lending Compliance Credit Unions Risk Management Fair Lending Nfairlending Cluster: Risk Management Compliance Lending Compliance Management Integrated Risk Blog Regulatory Compliance Management Nrisk News & Updates HMDA Risk Mortgage Lenders Vendor Management Ncomply Business Resiliency CRA Lending Compliance Blog Vendor CFPB Ncontinuity Third-Party Vendor Management Business Continuity Cybersecurity Fintech NVendor Strategic Planning Ncyber Regulatory Updates Ntransmittal Audits & Findings Regulatory Compliance OCC Company Culture Audit Nverify Compliance Management Exams FDIC Nfindings Findings NCUA Contract Management Employee Intranet Business Continuity Management Contract FRB Findings Management Enterprise Risk Management FFIEC Ncontracts manager Third-Party Vendors Vendor Risk Artificial Intelligence Vendor Risk Management Wealth Management 1071 ABA Bank Access Control Audit Findings Board Portal Call Report Compliance Risk Cybersecurity Assessment Digital Tansformation Due Diligence Efficiency Employee Engagement Exam findings FIEC Governance and Risk Management Inc. 5000 Internal Audit Management Mortgage Lending Nboardportal Verify integrated risk management
Vendor Management
Risk & Compliance

Vendor Management

Oct 31, 2018 1 min read
Should Vendor Management Report to Compliance or IT?
Risk & Compliance

Should Vendor Management Report to Compliance or IT?

Jul 18, 2018 3 min read
Inside the New SSAE 18: Vendor Management Changes
Risk & Compliance

Inside the New SSAE 18: Vendor Management Changes

May 12, 2017 4 min read