The on-site examination begins as a review of the institution’s written compliance program and documentation of self-testing and training, as well as a review of the institution’s system for capturing and reporting certain transactions pursuant to the Bank Secrecy Act, including any suspicious or unusual transactions possibly associated with money laundering or other financial crimes. Transaction testing is generally conducted to verify these systems.
2  BIS Review 35/2004  In those instances where there are deficiencies in the BSA/AML program, including failures to adequately document self-testing or training, obvious breakdowns in operating systems, or failures to implement adequate internal controls, the Federal Reserve’s examination procedures require examiners to conduct a more intensified second-stage examination that would include the review of source documents and expanded transaction testing, among other steps.