Bank Secrecy Act
The BSA was established to help law enforcement fight crime in the following 4 areas.
What is (1) Money Laundering; (2) Terrorism; (3) Tax Evasion; and (4) other Financial Crimes? All FIs must have a BSA program. Its purpose is to ASSURE and MONITOR compliance. BSA established in the 1970s and amended by US Patriot Act, post 9/11.
This acronym refers to the Customer Identification Program.
What is CIP? The program must be: (1) written; (2) adopted by the board; (3) included as part of BSA/Anti-Money Laundering monitoring program (AML); (4) appropriate for the size of the FIs and its business model.
The FI must maintain a record of each monetary instrument (e.g., cashier's check, traveler's check or money order) it sells when the instrument is purchased with at least this amount of cash?
What is between $3000 and $10,000?
(1) System of internal controls to assure ongoing compliance; (2) Independent testing for compliance; (3) Designation of BSA Officer; and (4) Ongoing training (at least annually)
What are the requirements of a BSA Program? BSA Program must be (1) written; (2) approved by the board of directors; and (3) reflected in the board minutes.
True / False - The FI must compare the names of members with government lists of known or suspected money launders and terrorists.
What is True? OFAC list - Office of Foreign Asset Control (public list); SDN - Specially Designated Nationals List (public list); and Patriot Act - 314a - highly confidential scrub of membership (law enforcement investigations).
True / False - The SAR requirements contain 4 categories of suspicious transactions which are: (1) funds or assets involving an illegal activity (certain monetary thresholds apply); (2) evading Bank Secrecy Act regulations; (3) transactions with no business or apparent lawful purpose; and (4) insider abuse.
What is True? SAR examples include: (1) check fraud; (2) embezzlement; (3) ID theft; and (4) wire transfer fraud.
Generally, refers to a financial transaction in which criminals, including terrorist organizations, attempt to disguise the proceeds, sources, or nature of their illicit activities.
What is money laundering?
True/ False - OFAC - Office of Foreign Asset Control, a division of the US Treasury - administers and enforces economic and trade sanctions and maintains a list of foreign nationals with whom US citizens are prohibited from conducting transactions.
What is True? OFAC applies to all US citizens, companies and financial institutions and requires: (1) written program; (2) identify high risk areas (e.g. international wires); (3) independent testing; (4) designation of OFAC Officer; and (5) risk assessment addressing (a) types of transactions and parties; (b) resources - staff and technology; and (c) geographic risks; and (6) training.
FinCEN - Financial Crimes Enforcement Network - an arm of the US Treasury.
Who is the main enforcer of BSA? Who's impacted by BSA compliance - FI, board of directors, officers, and all employees. Penalties for Noncompliance - $500 to $500,000 and imprisonment - up to 10 years.
These are the 4 pieces of information which the FI must obtain for every new member as required by the Patriot Act.
What is: (1) the legal name; (2) date of birth; (3) physical address; and (4) government issued ID number (consumer - SSN/alien ID number) or taxpayer ID (business - EIN) ----- Retention - 5 years.
True / False - It is permissible to notify a member that a SAR is being filed on the transaction.
What is False? - Disclosure is a violation of the law and may hinder law enforcement activities.
True/False - A customer cashes a check for $15,000 then later that same business day returns with a cash deposit of $12,000. No CTR would be required since the members net cash received was $3,000 at the end of the day.
What is False? FIs must also account for ATM and night deposit transactions.
BLOCK, FREEZE or PROHIBIT transactions with persons and countries on the Specially Designated Nationals and Blocked Persons (SDN) list.
What are the compliance requirements of an OFAC program? Blocked or rejected transaction msut be reported to OFAC within 10 business days. Comprehensive report includes all blocked property held as of June 30 --- Record retention is 5 years.
This document, completed on an annual basis, identifies RISKS involving FI activities, including: deposit products, member services, consumer loan products, membership base, and geographic locations, etc.
What is a BSA/AML Risk Assessment? FIs are expected to use a risk-based approach which considers illegal activity inherent in a particular FI.
True or False - (1) Documentary and (2) Non-Documentary Evidence are two permissible methods to VERIFY identity.
What is True? (1) OBTAIN, (2) VERIFY and (3) RETAIN customer information. Documentary - if opened in person - unexpired government issued ID with photograph (e.g., driver's license or military ID). BizChex. Non-Documentary - if account opened on-line - verify information with consumer reporting agency. BizChex. Customer Due Diligence - KNOW YOUR CUSTOMER- types and number of transactions, sources of income, etc. (beyond the 4 standard items).
True / False - The bank must notify its board of directors when a SAR is filed.
What is True? BSA requirement - "promptly" - defined to mean at least monthly.
True/False - 314(a) of the Patriot Act allows the FI to provide law enforcement authorities with customer specific information and such requests must not be shared with the customer in question.
What is True? 314(a) allows law enforcement authorities to obtain member specific information. The names provided in 314(a) request are scrub against the FI's membership.
This organization provides guidance to federal examiners, including the OCC and FDIC, on identifying and controlling risks associated with money laundering and terrorist financing.
What is the FFIEC? - Federal Financial Institutions Examinations Council.
True / False - A customer must be given notice regarding the FI's requirements to obtain and verify the member's identity.
What is True? Patriot Act - To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to (1) OBTAIN, (2) VERIFY, and (3) RECORD information that identifies each person who opens an account.
The only investigative demand, issued by the FBI or other federal governmental authority, which is not disclosed to anyone, including a FI's state or federal examiners.
What is a National Security Letter?
True or False - If a customer were to purchase $2,000 in cashier's checks with cash and $1,500 in money orders with cash on the same business day, no record is required to be kept since each transaction is below the $3,000 threshold.
What is False? Multiple purchases of the same or different types of monetary instruments on the same business day, totaling between $3,000 and $10,000, in which the financial institution has knowledge, should be treated as one purchase.