| 1 |
Anti-Money
Laundering/Bank Secrecy Act Basic Procedures |
Comments |
Ref. Page |
| 3 |
Consider t=
he following
procedures at each examination. Examiners are encouraged to exclude items
deemed unnecessary. This procedural analysis does not represent every
possible action to be taken during an examination. The references are not
intended to be all-inclusive and additional guidance may exist. For the
examination process to be successful, examiners must maintain open
communication with bank management and discuss relevant concerns as they
arise. |
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PRELIMINAR=
Y REVIEW |
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|
1 Review a=
nd analyze
management's anti-money laundering risk assessment of all major business
lines and products to determine if the bank engages in activities that co=
uld
expose the institution to potential money laundering activities. Such risk
assessment should include the institution's size, location, market, and
services, including new services or products to identify high-risk areas,
such as the following: |
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(Note: If =
the bank is
engaged in any of these activities, the examiner should strongly consider
conducting the Expanded Analysis for "Anti-Money Laundering Policies,
Procedures, and Programs" and the applicable sections for other
activities.) |
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1A Private banking.
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1B Payable through acc=
ounts. |
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1C International corre=
spondent
bank relationships. |
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1D Electronic banking.=
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1E Significant funds t=
ransfer
activity. |
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1F International funds=
transfer
activity. |
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1G Non-bank financial
institution relationships. |
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1H Deposit broker acti=
vity. |
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1I Special use/concent=
ration
accounts. |
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2 Review t=
he prior
examination report, workpapers, and written correspondence to identify
previously noted violations, deficiencies, and weaknesses. If the institu=
tion
is under a supervisory action, review the requirements of the action. Rev=
iew
correspondence concerning management's corrective actions. |
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3 Review i=
nternal and
external audit reports, gaining a preliminary assessment of their adequacy
regarding Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) matters.
Review management's response to audit findings. |
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4 Review S=
uspicious
Activity Reports (SARs) related to money laundering obtained from the FDIC
Regional Special Activities Case Manager. Determine if the institution or=
any
branches had significant changes in the volume or nature of SARs filed, a=
nd
investigate the reason(s) for these change(s). |
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(Note: Inc=
reases in
SARs may be caused by an increase in high-risk customers, entry into a
high-risk market or product, or an improvement in the bank’s method=
for
identifying suspicious activity. Decreases may be caused by deficiencies =
in
the bank’s process for identifying suspicious activity, the closure=
of
high-risk or suspicious accounts, personnel changes, or the failure of the
bank to file SARs.) |
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5 Review a=
listing of
the Currency Transaction Reports (CTRs) obtained from the FDIC Regional
Special Activities Case Manager. Determine if the institution or any bran=
ches
had significant changes in the volume or nature of CTRs filed. |
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(Note: Inc=
reases in
CTRs may be caused by growth, eliminations of exemptions, or increases in
retail or other high-risk customers. Decreases may be caused by the failu=
re
of the bank to file CTRs, an increase in exemptions, the elimination of
retail and/or other high-risk customers, or structuring.) |
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6 Review c=
ash shipment
reports available from the institution for unusual trends in the volume or
composition of cash shipments. |
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7 Review
correspondence that the bank has received from the Treasury (Financial Cr=
imes
Enforcement Network, Detroit Computing Center, Office of Foreign Asset
Control, etc.) to determine areas that may warrant additional emphasis du=
ring
the examination. |
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8 Title 31=
USC Section
5318A authorizes the Secretary of the Treasury to impose special measures
against jurisdictions, financial institutions, or one or more classes of
transactions that are found to be of primary money laundering concern.
Determine if any such measures have been imposed, and if the financial
institution has taken appropriate steps to comply with said measures. |
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ANTI-MONEY=
LAUNDERING
POLICIES, PROCEDURES, AND PROGRAMS |
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9 Determin=
e if the
board has adopted a written anti-money laundering program designed to ens=
ure
compliance. (Note: This program is required by Subpart B of Part 326 of t=
he
FDIC's Rules and Regulations.) |
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10 Determi=
ne if the
written anti-money laundering compliance program contains the following
required elements: |
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|
10A A system of intern=
al
controls to ensure ongoing compliance. |
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10B Independent testin=
g for
compliance conducted by either bank personnel or an outside party. |
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10C Designation of a q=
ualified
individual(s) responsible for coordinating and monitoring day-to-day
compliance. |
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10D Training for appro=
priate
personnel. |
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11 Determi=
ne if the
Board has adopted a written customer identification program for new accou=
nts
that meets the requirements of 31 CFR 103.121, which includes the followi=
ng: |
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11A Required customer
identification information. |
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11B Identity verificat=
ion
procedures. |
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|
11C Recordkeeping and =
retention
procedures. |
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|
11D Procedures regardi=
ng
circumstances where a bank cannot form a reasonable belief that it knows =
the
true identity of a customer. |
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|
11E Procedures for com=
parison
with government lists of known or suspected terrorists, or terrorist
organizations, including a requirement to follow all federal directives
issued in connection with such lists. |
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11F Customer notificat=
ion
procedures. |
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11G Procedures specify=
ing when
the bank will rely on the performance of another financial institution for
any part of their customer identification program. |
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12 Determi=
ne if the
bank has adopted account opening and monitoring guidelines that are
appropriate for the bank's size, location, products, customers, and strat=
egic
focus, including the following: |
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|
12A Verifying the cust=
omer's
source of funds and type of business, as deemed necessary. |
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12B Determining the cu=
stomer's
expected transactions at or through the bank. |
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12C Identifying and re=
porting
unusual transactions or activity. |
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13 Assess =
the
effectiveness of anti-money laundering policies, procedures, and programs,
and determine if they address the following areas: |
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|
13A The definition and=
examples
of money laundering in its various forms (for example, placement, layerin=
g,
integration, etc.). |
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13B Compliance with th=
e BSA and
related anti-money laundering laws and regulations. |
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13C Identification and
documentation of higher-risk activities, businesses, locations, and
countries. |
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14 Determi=
ne if
anti-money laundering policies, procedures, and programs cover all areas =
of
the bank, which may include the following: |
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14A Retail operations =
including
teller and currency operations and monetary instrument sales. |
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14B Loan department.
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14C Funds transfer fun=
ction. |
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14D Trust department.<=
/td>
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14E Safe deposit box r=
ental. |
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14F Correspondent bank=
ing. |
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14G Private banking op=
erations. |
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14H International bank=
ing
activities. |
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14I Discount brokerage
operations |
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14J Sale of non-deposit
investment products. |
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14K Deposit broker
relationships. |
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REPORTING =
REQUIREMENTS |
|
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CURRENCY T=
RANSACTION
REPORTS |
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15 Determi=
ne if the
written compliance program includes procedural guidelines for meeting the
following reporting requirements of BSA regulations: |
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|
15A Filing of CTRs (IR=
S Form
4789) for currency transactions greater than $10,000. |
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|
15B Filing of CMIRs (U=
.S.
Customs Form 4790) for currency shipments of greater than $10,000 out of =
or
into the U.S. on behalf of the institution, except via common carrier.
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|
15C Filing of an annua=
l report,
Report of Foreign Bank Financial Accounts (Treasury Form 90-22.1), of each
person who has a financial interest in, or signature authority over, bank,
securities, or other financial accounts in a foreign country. If applicab=
le,
determine if these reports were filed. |
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16 Review =
a sample of
completed CTRs, whether hard copy or from computer-generated filings, to
determine that: |
|
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|
16A CTRs are completed=
in
accordance with Internal Revenue Service instructions and are filed
accurately and completely within 15 calendar days after the date of the
transaction (25 days if magnetically filed). |
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|
16B CTRs are filed for=
large
cash transactions identified by tellers' cash proof sheets, automated lar=
ge
currency transaction system, or other type of aggregation system that cov=
ers
all relevant areas of the bank, unless an exemption exists for the custom=
er. |
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SUSPICIOUS=
ACTIVITY
REPORTING |
|
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17 Determi=
ne if the
compliance program provides an adequate suspicious activity identification
and reporting process, and includes the following: |
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17A An individual resp=
onsible
for preparing and filing suspicious activity reports. |
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17B A process for ensu=
ring that
suspicious activity reports (SARs) are filed within timeframes establishe=
d by
regulation along with factual and sufficiently detailed content to descri=
be
the suspicious activity. |
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|
17C A process for ensu=
ring that
transaction amounts are consistent with the type and nature of the busine=
ss
or occupation of the customer. |
|
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|
17D A process for revi=
ewing
"exempt person" accounts for unusual or suspicious activity.
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|
17E A process for esta=
blishing
expected activity levels (for example, historical transaction pattern or
input from client or bank officer) including who has the authority to cha=
nge
profiles. |
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|
17F A process for reco=
nciling
activity levels of higher-risk accounts against expected activity to ensu=
re
that activity levels are reasonable. |
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17G A system for revie=
wing
exception reports and what parameters are used to filter exceptions. |
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17H A process for requ=
esting
timely and adequate explanations of activity generated by monitoring repo=
rts. |
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17I A system for ensur=
ing
exception reports are responded to in a timely manner and are utilized and
maintained by appropriate parties to assist in detecting patterns of unus=
ual
activity. |
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17J A system (automate=
d or
manual) to detect structured transactions (both cash in and cash out) that
are under the $10,000 reporting threshold. |
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17K Procedures for doc=
umentation
of decision not to file a SAR. |
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17L Procedures for pro=
viding
notice of SARs filed to the Directorate (or a committee thereof). |
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EXEMPTIONS=
|
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18 Determi=
ne if the
bank has Phase I or Phase II exemptions. |
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19 Determi=
ne if the
bank has revoked any exemptions since the previous examination. If so,
determine the reason for the revocation(s) and whether the bank completed
Form TD F 90-22.53 (optional for revocations). |
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EXEMPTIONS
("PHASE I") |
|
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20 Determi=
ne if
Treasury Form TD F 90-22.53 (Designation of Exempt Person) has been filed
with the Internal Revenue Service for each "exempt person" as
defined in 31 CFR 103 (for example, a bank's domestic operations,
governmental agencies, "listed entities" and their subsidiaries,
etc.) within 30 days of the first reportable transaction that was exempte=
d. |
|
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21 Determi=
ne if
documentation on file supports Phase I exemptions granted by the bank.
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22 Assess =
whether
required annual reviews are performed to determine if a customer remains
eligible for designation as an "exempt person" under Phase I Ru=
les. |
|
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EXEMPTIONS
("PHASE II") |
|
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(Note: Und=
er the
"Phase II" Rules, the definition of exempt persons includes
"non-listed businesses" and "payroll customers" as
defined in 31CFR 103. Notwithstanding, there are several businesses that
remain ineligible for exemption purposes, please refer to 31 CFR 103 for
additional detail.) |
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23 Determi=
ne if
Treasury Form TD F 90-22.53 has been filed with the Internal Revenue Serv=
ice
for each "exempt person" identified by bank management. |
|
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24 Determi=
ne if
documentation on file supports Phase II exemptions granted by the bank.
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25 Assess =
whether
required annual reviews are performed to determine if a customer remains
eligible for designation as an "exempt person." |
|
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26 Determi=
ne if Form
TD F 90-22.53 is filed on March 15 of the second year from the date of the
original filing and biennially thereafter (Phase II exemptions only). |
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27 Verify =
that the
biennial filing includes both a notification of any change in control
relative to the "exempt persons" and a certification by the ban=
k as
to its maintenance of a system for reporting suspicious activity. |
|
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PURCHASES =
AND SALES OF
MONETARY INSTRUMENTS |
|
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28 For sal=
es in
currency in amounts between $3,000 and $10,000, inclusive, of bank checks,
bank drafts, cashier's checks, money orders, or traveler's checks, determ=
ine
that the required records are maintained for purchasers that have deposit
accounts with the bank. |
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29 For pur=
chasers who
do not have deposit accounts with the bank, determine that the required
information for cash purchases of monetary instruments in amounts of $3,0=
00
to $10,000, inclusive, is retained. |
|
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30 Assess =
whether the
bank has a system for capturing multiple cash sales of monetary instrumen=
ts
in one day in amounts totaling $3,000 or more. |
|
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|
30A If an automated sy=
stem is
used for identifying cash sales of monetary instruments, assess whether t=
he
internal audit or independent review adequately tests the accuracy and
validity of the system with regard to all points of purchase/sale. |
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|
30B If a manual system=
is used
for identifying cash sales of monetary instruments, assess whether the
internal audit or independent review verifies that required information is
obtained and retained. |
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31 Determi=
ne if
available records for monetary instrument "log" show suspicious
trends with regard to purchase or sale of instruments (for example, common
names, addresses, sequentially numbered purchases). |
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FUNDS TRAN=
SFER
ACTIVITY |
|
| 207 |
32 If cash=
is accepted
for funds transfers, assess whether the bank requires proper identificati=
on,
maintains documentation and records, and files CTRs, if applicable. |
|
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33 Determi=
ne if the
volume of funds transfer activity is appropriate given the bank's size,
location, and nature of customer account relationships. |
|
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34 Determi=
ne if the
bank’s system for monitoring funds transfer operations for suspicio=
us
activities is adequate given the bank’s size, complexity, location,=
and
type of customer relationships. |
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POUCH ACTI=
VITY |
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(Note: Pou=
ch activity
entails the use of a carrier or courier to transport currency, monetary
instruments, and other documents from outside the United States to a U.S.
bank account. Pouches can contain a variety of transactions (for example,
demand deposit accounts, loan payments, etc.) and can come from another
financial institution or from individuals. Examiners and banks should be
aware that bulk amounts of monetary instruments purchased in the United
States that appear to have been structured to avoid the BSA reporting
requirements often have been found in pouches or cash letters received fr=
om
foreign banks.) |
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35 Determi=
ne if the
bank has either incoming or outgoing pouch activity via carrier or courier
(for example, DHL, FedEx). |
|
| 219 |
36 Assess =
the adequacy
of logs or other documents maintained by management with regard to this
activity. |
|
| 221 |
37 Witness=
the opening
of a sample of incoming pouches (for a period of several days) and the
preparation of outgoing pouches to determine the nature of transactions.<=
/td>
| |
| 223 |
38 Identif=
y any
suspicious patterns (for example, sequentially numbered items), and deter=
mine
whether CTRs, CMIRs and/or SARs should be filed. |
|
| 225 |
OFFICE OF =
FOREIGN
ASSETS CONTROL (OFAC) |
|
| 227 |
(Note: The=
Department
of the Treasury's OFAC administers the laws that impose economic sanctions
against foreign countries to further U.S. foreign policy and national
security objectives. OFAC also is responsible for regulations restricting
transactions by banks with certain foreign countries, “specially
designated nationals,” “specially designated terrorists,̶=
1;
and “specially designated narcotics traffickers.” Further
information relating to OFAC and “restricted” transactions ca=
n be
found on their website at www.ustreas.gov/ofac.) |
|
| 229 |
39 Determi=
ne if the
board and senior management have developed policies and procedures that
comply with OFAC laws and regulations, including: |
|
| 231 |
|
39A Maintaining (and
distributing as appropriate) a list of prohibited countries, entities, and
individuals. |
|
| 233 |
|
39B Comparing new acco=
unts to
the OFAC listing. |
|
| 235 |
|
39C Comparing incoming=
and
outgoing funds transfers to the OFAC listing. |
|
| 237 |
|
39D Monitoring transac=
tions for
possible prohibited activity, including transactions through non-bank
financial institutions, if applicable. |
|
| 239 |
|
39E Comparing the bank=
’s
entire database to the OFAC listing periodically (depending on the
bank’s location, type of customers, type of transactions, etc.).
| |
| 241 |
|
39F Having a process f=
or
determining potential matches versus false hits. |
|
| 243 |
|
39G Having a process f=
or
blocking or rejecting accounts and notifying OFAC and the customer. |
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BSA RECORD=
KEEPING
REQUIREMENTS |
|
| 247 |
40 Determi=
ne if
procedural guidelines provide for the minimum five-year retention of the
original, microfilm, copy, or other reproduction of the required items.
| |
| 249 |
41 Determi=
ne if
records are updated frequently. |
|
| 251 |
42 Determi=
ne if
records are reasonably available. |
|
| 253 |
INFORMATIO=
N SHARING
REQUIREMENTS (USA PATRIOT ACT SECTION 314) |
|
| 255 |
Informatio=
n sharing
between Federal law enforcement agencies and financial institutions (31 C=
FR
103.100) |
|
| 257 |
43 Determi=
ne if the
bank has a program to comply with Section 314(a) information requests, wh=
ich
includes the following: |
|
| 259 |
|
43A Designation of an =
employee
as the contact person responsible for handling Section 314(a) information
requests. |
|
| 261 |
|
43B Procedures to ensu=
re that
all required records are searched, with positive hits reported to the
Treasury’s Financial Crimes Enforcement Network (FinCEN) within
designated timeframes. |
|
| 263 |
|
43C Procedures to ensu=
re that
the confidentiality of the information requested is safeguarded. |
|
| 265 |
|
43D Maintaining approp=
riate
records of search results. |
|
| 267 |
|
44 If a bank uses a th=
ird-party
vendor to conduct information searches, determine that there is an agreem=
ent
and/or procedures to ensure confidentiality. |
|
| 269 |
Voluntary =
information
sharing among financial institutions (31 CFR 103.110) |
|
| 271 |
45 If the =
bank has
chosen to share information with other financial institutions for the pur=
pose
of identifying and reporting activities involving possible terrorism or m=
oney
laundering, determine that policies and procedures address the following:=
|
|
| 273 |
|
45A Designation of a p=
oint of
contact for receiving and providing information. |
|
| 275 |
|
45B Ensuring the confi=
dentiality
of the information received and requested. |
|
| 277 |
|
45C A process for send=
ing and
responding to requests, including ensuring that other parties with whom t=
he
institution intends to share information (including affiliates) have filed
the proper notice. |
|
| 279 |
46 If the =
bank has
chosen to share information with other financial institutions for the pur=
pose
of identifying and reporting activities involving possible terrorism or m=
oney
laundering, determine that the appropriate certification has been filed w=
ith
FinCEN. |
|
| 281 |
47 If the =
bank has
shared information with another financial institution, ensure that the ba=
nk
has verified that the other financial institution filed a certification w=
ith
FinCEN. |
|
| 283 |
48 If the =
bank has
shared information with another financial institution, ensure that the ba=
nk
has not disclosed to the other institution that suspicious activity repor=
ts
have been filed. |
|
| 285 |
INTERNAL R=
OUTINE AND
CONTROLS |
|
| 287 |
49 Determi=
ne if
management has adequately integrated written policies and procedures into
internal controls to minimize the risk of money laundering, including
procedures to: |
|
| 289 |
|
49A Identify possible =
money
laundering. |
|
| 291 |
|
49B Monitor account ac=
tivity and
comply with regulatory reporting and recordkeeping requirements. |
|
| 293 |
|
49C Identify, investig=
ate, and
report suspicious transactions. |
|
| 295 |
AUDIT OR I=
NDEPENDENT
REVIEW |
|
| 297 |
50 Determi=
ne if the
AML/BSA audit function is independent with direct reporting to the
Directorate or Audit Committee. |
|
| 299 |
51 Determi=
ne if the
scope of the audit or independent review is sufficient to assess anti-mon=
ey
laundering risks of all major business lines, products, and locations,
including branches and overseas offices. |
|
| 301 |
52 Determi=
ne if the
audit/independent review is conducted at least annually. |
|
| 303 |
53 Determi=
ne if the
review verifies compliance with the bank's anti-money laundering policies=
and
procedures, and tests internal controls designed to prevent money-launder=
ing
activity. |
|
| 305 |
54 Determi=
ne if the
scope of the review is adequate and addresses the following items for
applicable functions of the bank: |
|
| 307 |
|
54A BSA reporting requ=
irements,
such as Currency Transaction Reports (CTRs) and Suspicious Activity Repor=
ts
(SARs). |
|
| 309 |
|
54B Compliance with ex=
emption
rules and requirements. |
|
| 311 |
|
54C Customer identific=
ation
program. |
|
| 313 |
|
54D Identifying and re=
porting
suspicious activities. |
|
| 315 |
|
54E BSA recordkeeping
requirements for deposits, loans, funds transfers, and sales of monetary
instruments. |
|
| 317 |
|
54F Funds transfer ope=
rations. |
|
| 319 |
|
54G On-going training =
of
appropriate personnel. |
|
| 321 |
|
54H Office of Foreign =
Asset
Control (OFAC) compliance. |
|
| 323 |
|
54I High-risk
activities/customers/areas. |
|
| 325 |
|
54J Retention of requi=
red
records. |
|
| 327 |
|
54K Customer due dilig=
ence. |
|
| 329 |
|
54L Compliance with in=
formation
sharing requirements (Title III, Section 314 USA PATRIOT Act). |
|
| 331 |
55 Determi=
ne if the
audit or independent review has adequately tested the accuracy and validi=
ty
of the automated large transaction identification system. |
|
| 333 |
|
55A If an automated la=
rge
transaction identification or aggregation system is not used, determine if
the audit or independent review includes a sample test check of tellers' =
cash
proof sheets or tapes to determine if large cash transactions are being r=
eported. |
|
| 335 |
56 Determi=
ne if the
review procedures confirm the integrity and accuracy of management
information reports used in the anti-money laundering compliance program =
(for
example, reports used to identify large currency transactions and aggrega=
te
daily cash transactions by customer or account). |
|
| 337 |
57 Determi=
ne if
management adequately addresses deficiencies and violations in a timely
manner. |
|
| 339 |
58 Determi=
ne how
deficiencies are tracked until resolved and assess the adequacy of the
tracking system. |
|
| 341 |
INFORMATIO=
N AND
COMMUNICATION SYSTEMS |
|
| 343 |
59 Determi=
ne if the
bank's information systems adequately and accurately identify reportable =
cash
transactions. |
|
| 345 |
|
59A If an automated sy=
stem is
used to capture and provide information on cash transactions, determine t=
he
following: |
|
| 347 |
|
59A1. Whether the repo=
rts show
all transactions (individual and multiple transactions) in excess of $10,=
000
on the same business day by or on behalf of the same individual, or accou=
nt. |
|
| 349 |
|
59A2. Whether the syst=
em
includes all points of cash entry and exit. |
|
| 351 |
|
59A3. Whether the disc=
ount
brokerage, private banking, trust, or any other department within the bank
engages in currency transactions subject to the regulations, and, if so, =
that
aggregation systems cover such activities. |
|
| 353 |
|
59B If a manual system=
is used
to identify and report cash transactions, determine how large and multiple
transactions are identified and aggregated for reporting purposes. |
|
| 355 |
BOARD AND =
SENIOR
MANAGEMENT OVERSIGHT |
|
| 357 |
60 Determi=
ne if
deficiencies in the bank's information systems relative to anti-money
laundering and BSA reporting are reported to senior management and the bo=
ard. |
|
| 359 |
61 Assess =
whether
management provides adequate reports on anti-money laundering and BSA
compliance to senior management or the Board. |
|
| 361 |
TRAINING
| |
| 363 |
62 Determi=
ne if the
following elements are adequately addressed in the training program: |
|
| 365 |
|
62A The importance man=
agement
places on ongoing education and training. |
|
| 367 |
|
62B Documenting the
appropriateness of the scope and frequency of training. |
|
| 369 |
|
62C The inclusion of p=
ersonnel
from all functional areas of the bank. |
|
| 371 |
|
62D Coverage of bank p=
olicies
and procedures. |
|
| 373 |
|
62E Coverage of new ru=
les and
requirements. |
|
| 375 |
|
62F Enhanced procedure=
s to
address previously cited violations and deficiencies. |
|
| 377 |
|
62G Coverage of differ=
ent forms
of money laundering. |
|
| 379 |
|
62H Identification of =
(and
examples of) suspicious activity. |
|
| 381 |
63 Determi=
ne that
training is comprehensive, conducted on a regular basis, required for new
hires and all relevant personnel, and clearly documented. |
|
| 385 |
Anti-Money
Laundering/Bank Secrecy Act Expanded Procedures |
|
| 387 |
ANTI-MONEY=
LAUNDERING
POLICIES, PROCEDURES, AND PROGRAMS |
|
| 389 |
1 Investig=
ate why the
policy, procedure, program, or internal control deficiencies identified in
the Core Analysis exist. Policy deficiencies may be attributed to the
following: |
|
| 391 |
|
1A Management overlook=
ed these
issues. |
|
| 393 |
|
1B Management is unfam=
iliar with
these issues. |
|
| 395 |
|
1C Management is unwil=
ling to
create or enhance policies and procedures. |
|
| 397 |
2 If poor =
compliance
with policies, procedures, or programs exists, determine the reason. Poss=
ible
reasons are detailed below. |
|
| 399 |
|
2A Lack of awareness of
policies' existence. |
|
| 401 |
|
2B Disregard for estab=
lished
policies. |
|
| 403 |
|
2C Misunderstanding th=
e intent
of policy guidelines. |
|
| 405 |
|
2D Poor internal commu=
nication
of subsequent revisions to policies, procedures, or programs. |
|
| 407 |
3 Determin=
e if
management commits to corrective action and supports proper controls and
monitoring to ensure policy guidelines are followed in the future. |
|
| 409 |
REPORTING =
REQUIREMENTS |
|
| 411 |
CURRENCY T=
RANSACTION
REPORTS |
|
| 413 |
4 If the r=
eview of the
information and areas outlined in the Core Analysis indicates significant
weaknesses in handling, identifying and reporting of large currency
transactions, or if money laundering activity is suspected, conduct the
following steps: |
|
| 415 |
|
4A Review tellers' cas=
h proof
sheets for non-reporting of large currency transactions for periods of ti=
me
of suspected violations. |
|
| 417 |
|
4B If available, revie=
w copies
of the following internally generated reports to identify and verify that
large cash transactions are being reported: |
|
| 419 |
|
4B1. Automated Large C=
ash
Transaction Reports - This is typically a daily report that aggregates la=
rge
cash transaction amounts to assist the bank in identifying multiple
transactions that meet reporting requirements and/or structuring of
transactions under the reporting threshold. |
|
| 421 |
|
4B2. Suspected Kiting =
Reports -
The account profile of an account used for money laundering can be simila=
r to
the profile of an account used for kiting. |
|
| 423 |
|
4B3. Demand Deposit Ac=
tivity
Report - These reports show daily balances and accumulated deposits and
withdrawals over a 30-day period and can show accounts that have signific=
ant
changes in the average balance or number of transactions. |
|
| 425 |
|
4B4. Incoming and Outg=
oing Wire
Transfer Logs - These logs can help identify transfers out of the country,
transfers funded by cash or monetary instruments, transfers for
non-customers, and unusual patterns of activity. |
|
| 427 |
|
4B5. Loans Listed by C=
ollateral
- These reports can identify significant loans secured by cash (for examp=
le,
CDs, bank accounts), which should be reviewed for purpose and consistency
with customer's business and resources. |
|
| 429 |
SUSPICIOUS=
ACTIVITY
REPORTING |
|
| 431 |
5 Review a=
utomated
systems reports for the following indicators of possible money laundering=
: |
|
| 433 |
|
5A Evidence of structu=
red
transactions. |
|
| 435 |
|
5B Evidence of
"concentration" accounts. |
|
| 437 |
|
5C Customers with freq=
uent cash
transactions that have provided either a foreign address or post office b=
ox
as an address or have requested that the bank hold monthly statements.
| |
| 439 |
|
5D Other suspicious or=
unusual
activities. |
|
| 441 |
6 Review c=
opies of
major correspondent bank statements for at least two months, together with
reconcilement sheets and general ledger sheets covering the same period.
Investigate large transactions reflected on either the institution's or t=
he
correspondent's records to determine their nature, as indicated by copies=
of
credit or debit advices, or general ledger tickets. Note any cash shipmen=
ts
made on behalf of individual customers to a correspondent bank for credit=
to
the customer's account at the correspondent bank. |
|
| 443 |
7 Review c=
orrespondent
account statements, customer account records, or telex records of accounts
controlled by the same person for large deposits of cashier's checks, mon=
ey
orders, or similar instruments drawn on other institutions in amounts und=
er
$10,000. These funds may possibly be transferred elsewhere in bulk amount=
s.
Note whether the instruments under $10,000 are sequentially numbered. |
|
| 445 |
8 Review i=
ncoming mail
of the institution to determine if currency deposits are received via mai=
l,
courier services, or internal deliveries, and whether CTRs are properly
filed. |
|
| 447 |
9 Review S=
ARs to
determine whether any accounts or functional areas of the bank require
further investigation. Determine if a SAR should be filed for suspicious
activity noted during the examination. |
|
| 449 |
EXEMPTIONS=
|
|
| 451 |
10 Compare=
a listing
of exempt customers obtained from the FinCEN database to the forms mainta=
ined
at the institution to determine if all forms were filed as required,
including forms for applicable correspondent banks. If forms were not fil=
ed
as required, perform the following steps: |
|
| 453 |
|
10A Investigate the ca=
use,
determining whether it was inadvertent or intentional. |
|
| 455 |
|
10B Determine if a bac=
kfiling
determination should be requested. |
|
| 457 |
11 If sign=
ificant
changes in the volume of exemptions are noted from the prior examination,
research and document the cause. |
|
| 459 |
RECORDKEEP=
ING
REQUIREMENTS |
|
| 461 |
Purchases =
and Sales of
Monetary Instruments |
|
| 463 |
12 If the =
review of
the information and areas outlined in the Core Section indicates signific=
ant
weakness in the handling, identifying or reporting of the sale of monetary
instruments for currency between $3,000 and $10,000, determine if bank
records capture the following information for established customers. |
|
| 465 |
|
12A The name of the pu=
rchaser. |
|
| 467 |
|
12B Date of purchase.<=
/td>
| |
| 469 |
|
12C The type(s) of ins=
trument(s)
purchased. |
|
| 471 |
|
12D The serial number(=
s) of each
of the instrument(s) purchased. |
|
| 473 |
|
12E The dollar amount(=
s) of each
of the instrument(s) purchased in currency. |
|
| 475 |
|
12F Method of verifyin=
g identity
of the purchaser (either at the time of purchase or when deposit account
opened). |
|
| 477 |
13 If the =
review of
the information and areas outlined in the Core Section indicates signific=
ant
weakness in the handling, identifying or reporting of the sale of monetary
instruments for currency between $3,000 and $10,000 to purchasers who do =
not
have deposit accounts with the bank, determine if bank records capture the
following information. |
|
| 479 |
|
13A The name and addre=
ss of the
purchaser. |
|
| 481 |
|
13B The social securit=
y or alien
identification number of the purchaser. |
|
| 483 |
|
13C The date of birth =
of the
purchaser. |
|
| 485 |
|
13D The date of purcha=
se. |
|
| 487 |
|
13E The serial number(=
s) of each
of the instrument(s) purchased. |
|
| 489 |
|
13F The type(s) of ins=
trument(s)
purchased. |
|
| 491 |
|
13G The dollar amount(=
s) of each
of the instrument(s) purchased in currency. |
|
| 493 |
|
13H Method of verifyin=
g the
identity of purchaser and specific identifying information (for example,
state of issuance and driver's license number). |
|
| 495 |
Other |
|
| 497 |
14 If the =
review of
the information and areas outlined in the Core Section indicates signific=
ant
weakness in record retention, determine if the following records, either
original, microfilm, copy, or other reproductions are retained for a mini=
mum
of five years: |
|
| 499 |
|
14A Currency Transacti=
on Reports
and other required forms. |
|
| 501 |
|
14B For each loan grea=
ter than
$10,000 (except those secured by real estate) the borrower's name and
address, date of loan, amount, and purpose. |
|
| 503 |
|
14C Each advice, reque=
st, or
instruction received regarding a transaction which results in the transfe=
r of
funds, currency, checks, investment securities, other monetary instrument=
s or
credit of more than $10,000 to a person, account, or place outside of the
U.S. |
|
| 505 |
|
14D Each advice, reque=
st, or
instruction given to another financial institution or other person located
within or outside the U.S., regarding a transaction intended to result in=
a
transfer of funds, currency, checks, investment securities, other monetary
instruments or credit, of more than $10,000 to a person, account, or place
outside the U.S. |
|
| 507 |
|
14E Each payment order=
that a
financial institution accepts as an originator's, intermediary, or
beneficiary's bank with respect to a funds transfer of $3,000 or more.
| |
| 509 |
|
14F Each document gran=
ting
signature authority over each deposit account. |
|
| 511 |
|
14G Each statement, le=
dger card,
or other record of each deposit account showing each transaction involving
the account, except those items listed in 31 CFR 103.34(b)(3). |
|
| 513 |
|
14H Each document rela=
ting to a
transaction of more than $10,000 remitted or transferred to a person,
account, or place outside the U.S. |
|
| 515 |
|
14I Each check or draf=
t in
excess of $10,000 drawn on or issued by a foreign bank which the domestic
bank has paid or presented to a non-bank drawee for payment. |
|
| 517 |
|
14J Each item relating=
to any
transaction of more than $10,000 received on any one occasion directly and
not through a domestic financial institution from a bank, broker, or deal=
er
in foreign exchange outside the U.S. |
|
| 519 |
|
14K Records prepared o=
r received
by a bank in the ordinary course of business which would be needed to
reconstruct a demand deposit account and to trace a check in excess of $1=
00
deposited in such demand deposit account. |
|
| 521 |
|
14L A record containin=
g the
name, address, and taxpayer identification number, if available, of any
person presenting a certificate of deposit for payment, as well as a
description of the instrument and the date of the transaction. |
|
| 523 |
|
14M A record containin=
g the
name, address, and taxpayer identification number, if available, of the
purchaser of each certificate of deposit, as well as a description of the
instrument, a notation of the method of payment, and the date of the
transaction. |
|
| 525 |
|
14N Each deposit slip =
or credit
ticket reflecting a transaction in excess of $100 or the equivalent record
for direct deposits or other wire transfer deposit transactions. |
|
| 527 |
|
14O Records to documen=
t the
bank's compliance with rules relating to exemptions from currency reporti=
ng. |
|
| 529 |
|
14P A record for each =
monetary
instrument purchased or sold for currency in amounts between $3,000 and
$10,000. |
|
| 531 |
|
14Q A record for each =
funds
transfer greater than $10,000 if transfer is to or from any person, accou=
nt,
or place outside the United States. |
|
| 533 |
|
14R Records required b=
y 31 CFR
103.34 for deposit accounts, payment orders, loans, and account holders.<=
/td>
| |
| 535 |
|
14S Documents provided=
by a
foreign bank, or documents otherwise relied upon by a covered financial
institution, required by 31 CFR 103.177. |
|
| 537 |
|
14T Required records u=
nder
customer identification rules, to include the following: |
|
| 539 |
|
14T1. All identifying
information about a customer obtained under paragraph (b)(2)(i) of 31 CFR
Section 103.121 for 5 years after the account is closed. |
|
| 541 |
|
14T2. The information =
obtained
pursuant to paragraphs (b)(3)(i)(B)(C) and (D) of 31 CFR Section 103.121 =
for
5 years after the record is made. |
|
| 543 |
PRIVATE BA=
NKING |
|
| 545 |
(Note: Pri=
vate banking
consists of comprehensive financial services offered to high net worth
individuals. Section 312 of the USA PATRIOT Act defines a private banking
account as an account (or any combination of accounts) that requires a
minimum aggregate deposit of funds or other assets of not less than
$1,000,000; is established on behalf of 1 or more individuals who have a
direct or beneficial ownership interest in the account; and is assigned t=
o,
or is administered or managed by, in whole or in part, an officer, employ=
ee,
or agent of a financial institution acting as a liaison between the finan=
cial
institution and the direct or beneficial owner of the account. Because
private banking activities expose banks to greater reputational and legal
risks, supervisors must make sure that banks have the necessary risk
management controls in place. (Note: For additional information on private
banking, please refer to the Federal Reserve's SR 97-19 (SUP) dated June =
30,
1997 on Private Banking Activities, and the interim final rule issued by =
the
Treasury effective July 23, 2002.) |
|
| 547 |
15 Determi=
ne if
management completes due diligence on private banking customers and
transactions, which may include the following: |
|
| 549 |
|
15A Documenting the be=
neficial
owners of private investment companies, trust, or hedge fund partnerships=
. |
|
| 551 |
|
15B Obtaining informat=
ion on the
clients' source of income and line of business. |
|
| 553 |
|
15C Corroborating sour=
ces of
wealth. |
|
| 555 |
|
15D Obtaining referenc=
es from
known third parties. |
|
| 557 |
|
15E Verifying the good=
standing
of business customers, which may include searching available data sources=
to
ensure that a business has been legally established. |
|
| 559 |
|
15F Requiring written
contact/visitation reports documenting visits to places of business. |
|
| 561 |
|
15G Establishing guide=
lines for
loans secured by highly liquid collateral. |
|
| 563 |
|
15H Monitoring transac=
tion
activity and reporting suspicious transactions. |
|
| 565 |
16 In acco=
rdance with
Title III, Section 312 of the USA PATRIOT Act, and implemented by an inte=
rim
final rule effective July 23, 2002, determine if the bank has taken the
following additional steps with regard to private banking accounts mainta=
ined
in the U.S. for non-U.S. persons: |
|
| 567 |
|
16A Ascertaining the i=
dentity of
the nominal and beneficial owners of the account, along with the source of
funds deposited into the account. |
|
| 569 |
|
16B Applying enhanced =
scrutiny
for accounts maintained by or on behalf of senior foreign political figur=
es,
an immediate family member, or close associate, to guard against launderi=
ng
the proceeds of foreign corruption. (Refer to interagency guidance dated
January 2001 entitled Guidance on Enhanced Scrutiny=
for
Transactions That May Involve the Proceeds of Foreign Official Corruption=
.) |
|
| 571 |
|
16C Developing a due d=
iligence
program reasonably designed to detect and report money laundering and the
existence of the proceeds of foreign corruption. |
|
| 573 |
PAYABLE TH=
ROUGH
ACCOUNTS (PTA) |
|
| 575 |
(Note: Pay=
able through
accounts are demand deposit accounts or correspondent accounts through wh=
ich
the bank extends check writing privileges to the customers of a foreign b=
ank.
A master account is opened in the name of a foreign bank, and the master =
account
is subsequently divided into sub-accounts, each in the name of one of the
foreign bank's customers. (Note: For additional information on PTAs, plea=
se
refer to the Federal Reserve's Supervisory Letter SR 95-1 or FDIC FIL 30-=
95.) |
|
| 577 |
17 Review =
the contract
with the foreign bank for the PTA to determine if it addresses the follow=
ing
areas: |
|
| 579 |
|
17A Procedures for ope=
ning
sub-accounts. |
|
| 581 |
|
17B Requirements to pr=
ovide the
U.S. bank with the true identity of sub-account holders. |
|
| 583 |
|
17C Cash transactions =
by
sub-account holders. |
|
| 585 |
|
17D Investigation and =
reporting
of suspicious transactions. |
|
| 587 |
|
17E Audit of the forei=
gn bank's
operations by the U.S. bank. |
|
| 589 |
18 Determi=
ne if the
U.S. bank has an effective system of internal controls for opening and
monitoring PTAs, addressing the following areas: |
|
| 591 |
|
18A Operating procedur=
es. |
|
| 593 |
|
18B Staff responsibili=
ties. |
|
| 595 |
|
18C Training. |
|
| 597 |
|
18D Audit. |
|
| 599 |
|
18E Identifying and re=
porting
suspicious transactions. |
|
| 601 |
19 Assess =
if the U.S.
bank: |
|
| 603 |
|
19A Has determined if =
the home
country supervisor of the foreign bank requires banks in its jurisdiction=
to
monitor transactions of its own customers consistent with U.S. requiremen=
ts. |
|
| 605 |
|
19B Is able to obtain =
adequate
information about the ultimate users of the PTA. |
|
| 607 |
|
19C Can ensure that it=
s PTA is
not being used for money laundering or other illicit purposes. |
|
| 609 |
(Note: If =
the U.S.
bank has failed to accomplish any of these three steps, the PTA arrangeme=
nt
with the foreign bank should be terminated as expeditiously as possible.)=
|
|
| 611 |
INTERNATIO=
NAL
CORRESPONDENT BANKING RELATIONSHIPS |
|
| 613 |
(Note: A b=
ank must
assess the level of risk associated with each of its correspondent accoun=
ts
through proper due diligence. Information should be gathered to understand
the nature of the correspondent's business. The level of perceived risk in
each account relationship, including the availability of the account to t=
hird
parties, should dictate the nature of risk management.) |
|
| 615 |
20 Determi=
ne the
adequacy of the bank’s policies and procedures pertaining to foreign
correspondent relationships, including policies of foreign branches. At a
minimum, policies and procedures should address the following: |
|
| 617 |
|
20A The process for id=
entifying
foreign correspondent accounts. |
|
| 619 |
|
20B The process for se=
nding,
tracking, receiving, and reviewing certification requests/requests for
information. |
|
| 621 |
21 Determi=
ne the
adequacy of the account approval process. Does bank management consider t=
he
following: |
|
| 623 |
|
21A Whether the bank i=
s located
in a bank secrecy or money laundering haven (if so, the nature of the
license). |
|
| 625 |
|
21B Whether the foreig=
n bank has
an effective anti-money laundering program. |
|
| 627 |
|
21C Whether the accoun=
t is
accessible by third parties, and if so, is recordkeeping adequate to
determine who has access to the account. |
|
| 629 |
22 Determi=
ne if the
bank has assessed the expected frequency, type, and volume of account
activity, and other relevant information, and whether the activity is
consistent with management's expectation. |
|
| 631 |
23 Evaluat=
e the bank's
system to identify suspicious activity in foreign correspondent accounts.=
|
|
| 633 |
24 In acco=
rdance with
Title III, Section 312 of the USA PATRIOT Act, and implemented by an inte=
rim
final rule effective July 23, 2002, determine if the bank has implemented=
due
diligence policies, procedures, and controls reasonably designed to detec=
t and
report money laundering through correspondent accounts established,
maintained, administered, or managed in the U.S. for a foreign financial
institution. |
|
| 635 |
25 Determi=
ne if the
bank has procedures to comply with Title III, Sections 313 and 319 of the=
USA
PATRIOT Act, implemented by Sections 103.177 and 103.185 of the
Treasury’s Financial Recordkeeping Regulations, to include the
following: |
|
| 637 |
|
25A Obtaining required
documentation on foreign correspondent accounts existing on October 28, 2=
002,
by March 31, 2003. For accounts established after October 28, 2002,
documentation should be obtained within 30 calendar days after the date t=
he
account is established. Documentation should include the following: |
|
| 639 |
|
25A1. The foreign corr=
espondent
bank is not a foreign shell bank and the U.S. correspondent account is not
used to indirectly provide services to foreign shell banks. |
|
| 641 |
|
25A2. A record identif=
ying the
owners of each foreign correspondent whose shares are not publicly traded=
. |
|
| 643 |
|
25A3. The name and add=
ress of a
person who resides in the United States and is authorized and has agreed =
to
accept service of legal process for records regarding each such account.<=
/td>
| |
| 645 |
|
25B Procedures for clo=
sing
foreign correspondent accounts if required documentation is not obtained
within specified timeframes. |
|
| 647 |
|
25C Procedures to re-c=
ertify
required documentation on foreign correspondent accounts every 3 years.
| |
| 649 |
|
25D Procedures to resp=
ond to
written requests from Federal law enforcement officers for information
regarding foreign correspondent accounts within 7 days after receipt of s=
uch
requests. |
|
| 651 |
|
25E Procedures to term=
inate
foreign correspondent relationship(s) not later than 10 days after receip=
t of
a written notice from the Secretary of the Treasury or Attorney General t=
hat
the foreign correspondent has failed to comply or initiate proceedings co=
ntesting
a summons or subpoena issued under this section. |
|
| 653 |
26 Determi=
ne if the
bank has closed any foreign correspondent accounts due to nonconformance =
with
Section 103.177 of the Treasury’s Financial Recordkeeping Regulation
since the earlier of the regulation’s effective date (October 28, 2=
002)
or the previous examination. If so, determine that |
|
| 655 |
|
26A Accounts were clos=
ed within
a commercially reasonable time period. |
|
| 657 |
|
26B No new positions w=
ere taken
upon notification of closing. |
|
| 659 |
|
26C Accounts were not
re-established without obtaining the required information (Section 103.77
(d)). |
|
| 661 |
ELECTRONIC=
BANKING |
|
| 663 |
(Note: Ele=
ctronic
banking consists of electronic access through direct PC connection, the
Internet, or other means to bank services, including opening of deposit
accounts, applying for loans, and conducting various transactions.) |
|
| 665 |
27 Review =
procedures
used to conduct due diligence on customers opening accounts (loan or depo=
sit)
through electronic means to determine if management obtains the following=
: |
|
| 667 |
|
27A Proper identifying
information consistent with the bank’s customer identification prog=
ram,
and |
|
| 669 |
|
27B The source of fund=
s used to
open deposit accounts. |
|
| 671 |
28 Determi=
ne if
management has established procedures to review transaction activity thro=
ugh
electronic banking products for possible money laundering and suspicious
activity. |
|
| 673 |
FUNDS TRAN=
SFER
ACTIVITY |
|
| 675 |
29 If fund=
s transfers
are sent to or received from financial institutions in other countries,
especially countries with strict privacy and secrecy laws, determine if
amounts, frequency, and countries are consistent with the nature of the
business or occupation of the customer. |
|
| 677 |
30 Assess =
whether the
bank has procedures to monitor accounts with frequent cash deposits and
subsequent funds transfers to a larger institution or out of the country.=
|
|
| 679 |
31 Assess =
whether
there are any unusual trends or patterns with regard to funds transfers (=
for
example, commonalties with regard to beneficiaries, originators, account
numbers, addresses, etc.). |
|
| 681 |
RECORDKEEP=
ING FOR
FUNDS TRANSFERS |
|
| 683 |
32 For fun=
ds transfer
originations of $3,000 or more, ascertain if the following records are
retained (which may be with the payment order in the bank's files if the
originator has an established relationship with the bank): |
|
| 685 |
|
32A The name and addre=
ss of the
originator. |
|
| 687 |
|
32B The amount of the =
funds
transfer. |
|
| 689 |
|
32C The date of the fu=
nds
transfer. |
|
| 691 |
|
32D Any payment instru=
ctions
received from the originator with the payment order. |
|
| 693 |
|
32E The identity of the
beneficiary's bank. |
|
| 695 |
|
32F As many of the fol=
lowing
items as are received with the payment order: |
|
| 697 |
|
32F1. The name and add=
ress of
the beneficiary. |
|
| 699 |
|
32F2. The account numb=
er of the
beneficiary. |
|
| 701 |
|
32F3. Any other specif=
ic
identifier of the beneficiary. |
|
| 703 |
33 For fun=
ds transfers
of $3,000 or more for originators that do not have an established
relationship with the bank, ascertain if the information listed in proced=
ure
32 is retained, plus the following: |
|
| 705 |
|
33A If the payment ord=
er is made
in person, the identity of the non-customer should be verified and
documented. |
|
| 707 |
|
33B If the payment ord=
er is not
made in person, the bank should obtain and retain a record of the name and
address of the person placing the payment order, as well as the person's
taxpayer identification number (for example, social security number) or, =
if
none, alien identification number or passport number and country of issua=
nce.
The bank should also note the lack of this information. A copy or record =
of
the method of payment (for example, check or credit card) should also be
retained. |
|
| 709 |
|
33C If the bank has kn=
owledge
that the person placing the payment order (whether placing the order in
person or not) is not the originator, the bank should obtain and retain a
record of the originator's taxpayer identification number (for example,
social security number) or, if none, alien identification number or passp=
ort
number and country of issuance (if known by the person placing the order).
The bank should also note the lack of this information. |
|
| 711 |
34 For fun=
ds transfers
of $3,000 or more for which the bank is acting as the intermediary, deter=
mine
that either the original or a microfilm, other copy, or electronic record=
of
the payment order is retained. |
|
| 713 |
35 For eac=
h payment
order accepted by a beneficiary's bank, determine that either the origina=
l or
a microfilm, other copy, or electronic record of the payment order is
retained. |
|
| 715 |
36 For eac=
h payment
order accepted by a beneficiary's bank, if the beneficiary does not have =
an
established relationship with the originating bank, determine that the
beneficiary bank retains the following information: |
|
| 717 |
|
36A If the proceeds are
delivered in person to the beneficiary or its representative or agent, the
bank must verify the identity of the person receiving the proceeds and re=
tain
a record of that information. |
|
| 719 |
|
36B If the bank has kn=
owledge
that the person receiving the proceeds is not the beneficiary, the bank m=
ust
obtain and retain a record of the beneficiary's name and address, as well=
as
the beneficiary's taxpayer identification number (for example, social sec=
urity
number or employer identification number) or, if none, alien identificati=
on
number or passport number and country of issuance, if known by the person
receiving the proceeds, or a notation of the lack of this information.
| |
| 721 |
|
36C If the proceeds are
delivered other than in person, a copy of the check or other instrument u=
sed
to effect payment, or the information contained thereon, as well as the n=
ame
and address of the person to whom it was sent must be retained. |
|
| 723 |
37 Determi=
ne that the
information retained for funds transfers greater than $3,000 is retrievab=
le
by the name of the originator or beneficiary. If the originator or
beneficiary is an established customer of the bank, the information must =
also
be retrievable by account number. |
|
| 725 |
NON-BANK F=
INANCIAL
INSTITUTIONS (NBFI) |
|
| 727 |
(Note: Non=
-bank
financial institutions (NBFI) are broadly defined as institutions that of=
fer
financial services. Banks that maintain account relationships with these
entities are exposed to higher risk for potential money laundering because
these entities are less regulated and may have limited or no documentatio=
n on
customers. Additionally, a bank may be exposed to possible OFAC violations
for unknowingly engaging in prohibited transactions through a NBFI account
relationship. |
|
| 729 |
Money serv=
ices
businesses are a subset of NBFIs and consist of non-banks offering
financial-type services, such as check cashing, money transmittals, sales=
of
monetary instruments, or currency exchange. These businesses may be licen=
sed
by the state or local government.) |
|
| 731 |
38 Determi=
ne if
management conducts proper due diligence on customers offering currency
exchange, check cashing, money transmittals, sale of monetary instruments,
etc. Determine if management's analysis includes the following: |
|
| 733 |
|
38A Whether the busine=
ss is in
compliance with all state laws requiring licensing and approval. |
|
| 735 |
|
38B Whether the busine=
ss is
registered with the Treasury’s Financial Crimes Enforcement Network
(this applies to money services businesses only). |
|
| 737 |
|
38C Whether the busine=
ss has
procedures to comply with applicable Bank Secrecy Act requirements, inclu=
ding
retention of records. |
|
| 739 |
|
38D The types and amou=
nts of
currencies or instruments handled, and whether any additional services are
offered. |
|
| 741 |
|
38E The targeted custo=
mer base. |
|
| 743 |
|
38F Whether internatio=
nal
transfers are anticipated in the normal course of business, and what
countries may be involved. |
|
| 745 |
|
38G Whether the busine=
ss has
proper controls to monitor for suspicious activity, including patterns of
transmittals over time. |
|
| 747 |
|
38H Whether the busine=
ss has
procedures to ensure compliance with OFAC regulations. |
|
| 749 |
39 Determi=
ne if the
account activity of the NBFI is monitored to ensure that activity is
consistent with expectations and that suspicious activity is properly
reported. |
|
| 751 |
DEPOSIT BR=
OKER
ACTIVITIES |
|
| 753 |
40 Determi=
ne if
adequate policies and procedures have been developed relative to deposit
brokers by: |
|
| 755 |
|
40A Verifying the legi=
timacy of
the broker (for example, obtaining corporate or similar documentation,
requesting references, or conducting independent database searches). |
|
| 757 |
|
40B Performing indepen=
dent
reviews to verify the accuracy of information that the broker provides
regarding deposit customers. |
|
| 759 |
|
40C Determining whethe=
r the
deposit broker will accept deposits from outside the United States. If pl=
aced
in the bank, management should establish procedures for verifying the sou=
rce
of funds and identity of such depositors. |
|
| 761 |
|
40D Obtaining periodic=
financial
information from the broker. |
|
| 763 |
SPECIAL-US=
E/CONCENTRATION
ACCOUNTS |
|
| 765 |
(Note: Spe=
cial-use
accounts (SUAs) are in-house accounts established to facilitate the
processing and settlement of multiple or individual customer transactions
within the bank, usually on the same day. These accounts have several
different names, including concentration, omnibus, suspense, settlement,
intra-day, sweep, and collection accounts. SUAs are used widely in private
banking, wire transfer, cash management operations, and other bank
departments. Money laundering risk can arise in these accounts because
customer-identifying information, such as name, address, and account numb=
er
can be separated from financial transactions. If that happens, an effecti=
ve
audit trail is lost, and accounts can be misused or administered improper=
ly.) |
|
| 767 |
41 Assess =
the adequacy
of internal controls that have been implemented to ensure the proper use =
of
these accounts, including the following: |
|
| 769 |
|
41A Whether employees =
can access
(debit or credit) special-use accounts, and if so, who monitors this
activity. |
|
| 771 |
|
41B Whether customers =
are
prohibited from directing the movement of their funds into, out of, or
through special-use accounts. |
|
| 773 |
|
41C Whether bank emplo=
yees are
prohibited from informing customers of the existence of, or the means of
identifying, the special-use accounts of the bank. |
|
| 775 |
|
41D Whether documentat=
ion is
required that shows the movement, and ownership of, any customer funds pl=
aced
in a special-use account. |
|
| 777 |
|
41E Whether customer
transactions are reported on the customer's account statements. |
|
| 779 |
|
41F Whether the accoun=
ts are
reconciled frequently. |
|
| 781 |
|
41G Whether there is a=
process
in place to resolve discrepancies. |
|
| 783 |
|
41H Whether such accou=
nts are
monitored for suspicious activity. |
|
| 785 |
42 Review =
the nature
of account activity for any suspicious or unusual activity. |
|
|
|
|
|
|
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