Due Diligence and Ongoing Monitoring

Hi,

My midsize community bank is considering switching BSA/AML transaction monitoring vendors.  The vendor has not had an independent review of their internal system.  I suggested we move ahead with the vendor and get our own validation within 6-months.  This is a critical vendor due to the nature of transactions they process.  My question is, is it okay to proceed this way or is the validation really something we should get prior to making the switch?

Thanks!

I would not recommend moving forward with an alternate vendor before reviewing evidence of an independent review. A BSA/AML transaction monitoring vendor is likely going to be high-risk, in addition to critical because of the regulatory compliance implications. And critical and high-risk vendors should really undergo the highest level of due diligence before you sign the contract. If you moved forward with that vendor without validation, consider the time and resources you may need to invest to remediate any compliance issues that were found.

So before you switch to an alternate vendor, I would recommend obtaining that independent review to ensure you aren't dealing with larger issues down the line.

I hope this helps and I'd love to hear from others who have been in similar situations.