(a) Each regulated institution shall maintain a Transaction Monitoring Program reasonably designed for the purpose of monitoring transactions after their execution for potential BSA/AML violations and suspicious activity reporting, which system may be manual or automated, and which shall include the following attributes, to the extent they are applicable:

1. (1) be based on the risk assessment of the institution;
2. (2) be reviewed and periodically updated at risk-based intervals to take into account and reflect changes to applicable BSA/AML laws, regulations and regulatory warnings, as well as any other information determined by the institution to be relevant from the institution’s related programs and initiatives;
3. (3) appropriately match BSA/AML risks to the institution’s businesses, products, services, and customers/counterparties;
4. (4) BSA/AML detection scenarios with threshold values and amounts designed to detect potential money laundering or other suspicious or illegal activities;
5. (5) end-to-end, pre-and post-implementation testing of the Transaction Monitoring Program, including, as relevant, a review of governance, data mapping, transaction coding, detection scenario logic, model validation, data input and program output;
6. (6) documentation that articulates the institution’s current detection scenarios and the underlying assumptions, parameters, and thresholds;
7. (7) protocols setting forth how alerts generated by the Transaction Monitoring Program will be investigated, the process for deciding which alerts will result in a filing or other action, the operating areas and individuals responsible for making such a decision, and how the investigative and decision-making process will be documented; and
8. (8) be subject to an on-going analysis to assess the continued relevancy of the detection scenarios, the underlying rules, threshold values, parameters, and assumptions.

(b) Each regulated institution shall maintain a Filtering Program, which may be manual or automated, reasonably designed for the purpose of interdicting transactions that are prohibited by OFAC, and which shall include the following attributes, to the extent applicable:

1. (1) be based on the risk assessment of the institution;
2. (2) be based on technology, processes or tools for matching names and accounts⁴, in each case based on the institution’s particular risks, transaction and product profiles;
3. (3) end-to-end, pre- and post-implementation testing of the Filtering Program, including, as relevant, a review of data matching, an evaluation of whether the OFAC sanctions list and threshold settings map to the risks of the institution, the logic of matching technology or tools, model validation, and data input and program output;
4. (4) be subject to on-going analysis to assess the logic and performance of the technology or tools for matching names and accounts, as well as the OFAC sanctions list and the threshold settings to see if they continue to map to the risks of the institution; and
5. (5) documentation that articulates the intent and design of the Filtering Program tools, processes or technology.

(c) Each Transaction Monitoring and Filtering Program shall require the following, to the extent applicable:

1. (1) identification of all data sources that contain relevant data;
2. (2) validation of the integrity, accuracy and quality of data to ensure that accurate and complete data flows through the Transaction Monitoring and Filtering Program;
3. (3) data extraction and loading processes to ensure a complete and accurate transfer of data from its source to automated monitoring and filtering systems, if automated systems are used;
4. (4) governance and management oversight, including policies and procedures governing changes to the Transaction Monitoring and Filtering Program to ensure that changes are defined, managed, controlled, reported, and audited;
5. (5) vendor selection process if a third party vendor is used to acquire, install, implement, or test the Transaction Monitoring and Filtering Program or any aspect of it;
6. (6) funding to design, implement and maintain a Transaction Monitoring and Filtering Program that complies with the requirements of this Part;
7. (7) qualified personnel or outside consultant(s) responsible for the design, planning, implementation, operation, testing, validation, and on-going analysis of the Transaction Monitoring and Filtering Program, including automated systems if applicable, as well as case management, review and decision making with respect to generated alerts and potential filings; and
8. (8) periodic training of all stakeholders with respect to the Transaction Monitoring and Filtering Program.