What is a requirement for ongoing member due diligence in an effective BSA/AML compliance program?

In the context of ongoing member due diligence within a Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance program, the requirement for appropriate risk-based procedures is essential. This involves adopting a thorough understanding of the risks presented by different members or customers, which allows institutions to devise measures that are proportionate to the specific risks identified.

Risk-based procedures enable institutions to prioritize resources and focus their due diligence efforts where they are most needed, based on the risk profile of the customer. For higher-risk customers, enhanced due diligence may be necessary, while lower-risk customers might require less intensive procedures. This approach is both efficient and effective in mitigating the risk of money laundering and other financial crimes, aligning with regulatory expectations.

Although periodic reviews of a member's financial health, implementing automated systems, and conducting monitoring during account opening can play roles in an overall compliance strategy, they do not specifically address the fundamental requirement of having comprehensive risk-based procedures in place. This focus ensures that due diligence is tailored and responsive to the evolving nature of risks associated with various members.