Pub. 4 2014-2015 Issue 1

16 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S procedures are observed and the AML program is compliant with your institution’s requirements. Service Level Agreements Communication with your TPSP is key factor in making sure AML program activities are performed according to your institution’s compliance expectations as well as those of banking regulators. Written service level agreements should be developed that stipulate specific expectations and requirements of the TPSP. Items to consider include: • Frequency and depth of communications between your institution and the TPSP regarding AML activities • Reporting processes for suspected suspicious activity events to your institution • Frequency of independent testing of the TPSP’s AML program • Minimum standards for CIP and CDD Contractual arrangements should also include penalties associated with noncompliance with service level agreements. Penalties should be significant in the case of noncompliance with AML program requirements. Finally, your institution should develop clear internal guide- lines regarding when termination of the TPSP relationship may be necessary. Integrating AML Program Management with Vendor Management Programs Effective third-party AML programs are an essential ele- ment in maintaining the safety and soundness of any financial institution. Deploying focused due diligence in key areas of AML programs—including risk assessment, CDD, EDD, suspicious activity reporting, and other core components—continues to be critical in ensuring TPSPs are performing these functions in a manner that mitigates AML risk. Integrating your AML diligence with efforts to maintain ef- fective controls through your institution’s vendor management programs is another way to leverage resources already deployed in managing third-party risk. Coordination between the two functions in your institutionwill further enhance riskmitigation through unified streams of communication. n Dan Huston has worked with financial institutions since 1979, with a focus on bank operations, riskmanagement, fiduciary and trust operations, and lending compliance. You can reach him at (503) 471-1291 or dan.huston@mossadams.com . Nationally recognized for our corporate, regulatory, and litigation practices for community banks. O ering a range of legal services to our banking community: • A liate Transactions • Asset-Based Lines of Credit • Bank Operations • Brand Banking • Compliance & Disclosure • Consumer Finance • Credit Document Drafting and Review • Creditor’s Rights/Bankruptcy • DeNovo Financial Institutions Charters • Factoring • Foreclosures and Collections • Holding Company Formations • Lender Liability • Lending Limit Advice • Leveraged Acquisitions • Litigation • Loan Originations and Modi cations • Loan Restructuring • Mergers and Acquisitions • New Product Development • Project Finance • Recapitalization • Regulatory Advice • Regulatory Enforcement Defense • OREO Disposition • Stock O erings • Strategic Planning • Subchapter S Corporate Restructuring • Uniform Commercial Code • Use of ESOPs Contact: Karen L. Witt | 303.623.9000 | www.LRRLaw.com ALBUQUERQUE | CASPER | COLORADO SPRINGS | DENVER | LAS VEGAS | PHOENIX | RENO | TUCSON | SILICON VALLEY E ective September 2013  Third-Party – continued