Richmond Fed Urges Banks to Align their BSA/AML and Fraud Units

The Federal Reserve Bank of Richmond published a best-practices piece urging community banks in the Fifth Federal Reserve District to strengthen ongoing communication between their Bank Secrecy Act ("BSA")/AML and fraud units.

In the article, the Richmond Fed noted that while credit losses remained stable, fraud losses continued to rise. The piece responded to an interagency focus on combating fraud, particularly check fraud, and followed remarks by Federal Reserve Vice Chair for Supervision Michelle Bowman acknowledging the costs fraud imposes on consumers and institutions.

The Richmond Fed recommended that banks adopt mechanisms to ensure fraud-related matters are timely identified for Suspicious Activity Report ("SAR") filing, such as combining BSA and fraud functions, cross-training staff, or forming a joint risk committee. The article identified several fraud schemes with BSA/AML relevance requiring heightened scrutiny, including account takeovers, elder financial exploitation, new account fraud, and check fraud. The Richmond Fed also reminded banks to mark the SAR Field 38(d) check box for "Elder Financial Exploitation."

The piece set no compliance deadline but directed banks with questions to contact their Richmond Fed supervision relationship team.