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Bank Secrecy Act Training 2015

For Employees

Jes Hayes

on 25 March 2015

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Transcript of Bank Secrecy Act Training 2015

Bank Secrecy Act
& Anti-Money Laundering

What is the
Bank Secrecy Act?
Federal Law, enacted by Congress in 1970, and strengthened in 2002 with the Patriot Act, where Financial Institutions assist the government in detecting and preventing money laundering and terrorism financing; and requiring those institutions to keep records of cash deposits, withdrawals, exchanges or an aggregate of cash of more than $10,000.
Elements of the BSA
1. Internal Controls - records of transactions,
reports, policies and procedures; and an internal
company-wide culture of BSA security.
2. Bank Secrecy Officer
3. Annual training for all staff
4. Registration with Financial Crimes Enforcement Network (FinCen)
5. CIP: Customer (Member) Identification Program - verifying identity
of individual(s) opening an account
6. File Reports:
- Cash transactions exceeding $10,000 (daily aggregate).
- Any suspicious activity that may be indicative of
criminal behavior (SAR).
So what is
the Credit Union
required to do?

Suspicious Activity Report (SAR)
Required to be filed by the credit union for all transactions that are known or suspected to be fraudulent whether the transaction is completed or not.
Currency Transaction Reports (CTR)
File a CTR when you have:
1. CASH transactions over $10,000 in one business day
- A Cash transaction involves the physical transfer of actual cash in or out the door
2. When there are multiple cash transactions, totaling more than $10,000, in one business day
Customer/Member Identification Program (CIP)
The Credit Union's policies and procedures for verifying the identity of an individual who wants to open an account
Having a Member Identification Program
Makes it more difficult for terrorists and other criminals to manipulate financial institutions
Reduces the Credit Union's risk of losses from fraud and other crimes
Protects members from becoming victims of identity theft
A Member Identification Program
Has written policies and procedures in place to obtain identifying data
Verifies the member's identity
Maintains records of identification used to verify the identity of an individual and keep these records on file for five years after an account is closed
Determines if a member appears on any lists of suspected or known terrorists
Notifies potential members of these requirements
Examples of Suspicious Activity
- changing the amount of the transaction to evade filing a CTR.
Further Examples of Suspicious Activity
Exchanging small denomination bills for large denomination bills
Transactions include:
Deposits, withdrawals, payments or exchanges
Complete the SAR form and report the situation to the Bank Secrecy Officer immediately. The situation can be anything that appears criminal, suspicious or atypical.
The Bank Secrecy Officer must file any SAR with FinCEN within 30 days of being notified of the activity, and must file any continuing suspicious activity report every 90 days.
Astera retains a copy of the SAR for five years.
Check Kiting
- creating artificial balances in one or more accounts at various financial institutions. Criminal takes advantage of the check clearing process by using uncollected funds.
- multiple transactions of less than $10,000, but totaling over $10,000 over consecutive or near consecutive days.
Member refuses to provide information for CTR, or asks you how to avoid having to file a CTR
Identity Theft
Drug residue or odor on the bills
The purpose of the CIP is to prevent, detect, and prosecute terrorism and international money laundering
US Patriot Act
Uniting and
But what is
Money Laundering?
the criminal practice of filtering dirty money through a series of transactions so the funds are CLEANED to look like proceeds are from legal activities
Money Laundering is...
Money Laundering can Involve
Three Independent Steps:
- the process of depositing unlawful cash proceeds into an account at a financial institution.
- the process of separating the proceeds of the criminal activity through the use of complex financial transactions. The criminal may convert cash into money orders, official bank checks, bonds, or wire transfers.
- occurs when the criminal uses a legitimate transaction or business to disguise the unlawful proceeds. Such funds can be laundered by creating false import/export invoices.
Office of Foreign
Assets Control (OFAC)
OFAC is a division of the US Treasury that administers and enforces sanctions against:
that sponsor or support terrorist activities and also against international drug traffickers
The Credit Union's duties...
Access government list of targeted countries, organizations, and individuals with whom financial transactions are prohibited to do business with.
Compare the OFAC list to our existing membership on a daily basis.
Complete an OFAC check on new members before opening an account to verify that they do not appear on the list of potential terrorists.
Perform an inquiry against the OFAC list for non-member transactions (outgoing wire transfers, payees of Credit Union issued checks and "On-us" checks).
If there is an OFAC Match
1. Blocks the funds immediately
2. Reports the blocking to FinCEN within 10 days
3. Acts on instructions given by FinCEN
Noncompliance with BSA
Credit Union Penalties
Employee Penalties
Potential Credit Union Penalties
Cease and Desist Order
Loss of Charter
Criminal money penalties up to the greater of $1 million or twice the value of the transaction
Civil money penalties:
Potential Employee Penalties
What is YOUR responsibility?
Verify identity of individual opening a new account
Complete Currency Transaction Reports (CTR)
Report Suspicious Activity
OFAC verification
AND be aware of all policies and procedures related to the Bank Secrecy Act and attend
When do we file a CTR?
Electronic filing of a Currency Transaction Report must be completed with the Financial Crimes Enforcement Network (FinCEN) website no later than 15 days after the transaction.
A CTR is NOT a secret...
You may inform the member about the
Currency Transaction Report (CTR) filing
A copy of the CTR should be retained for 5 years
Intercept and
Required to
America by
Anti-Money Laundering Program
Through the Financial Crimes Enforcement Network (or FinCEN), the government collects and analyzes information about financial transactions in order to combat money laundering.
The government encourages financial institutions to share information with other financial institutions and government agencies.
After the US Patriot Act,
Anti-Money Laundering
is the new name for Suspicious Activity.
The Bank Secrecy Officer
SARs CANNOT be discussed with the member!
SARs CANNOT be discussed with the member!
But, A Suspicious Activity Report
You are prohibited
telling the member about a SAR or indicating that you are filing a SAR!
Do not discuss a SAR with anyone other than the Bank Secrecy Officer.
How to Combat Suspicious Activity
Make all reasonable efforts to determine a member's true identity
Remain alert to unusual or suspicious activities (such as wires, deposits, loan activities)
Avoid "Willful Blindness" which is the intentional disregard of the facts, which could have led to the discovery of an unlawful activity. Astera can be held liable for not reporting SARs - when in doubt, report the activity!
A cash transaction can be the combination of several transactions throughout the day or one specific transaction such as:
A deposit of more than $10,000 in cash
A withdrawal of more than $10,000 in cash
The cashing of a check or group of checks that total more than $10,000
An exchange of currency, for example, the exchanging of smaller bills for larger ones for more than $10,000
A loan payment of more than $10,000 in cash
The cashing of Savings Bonds of more than $10,000
Further Examples of Cash Transactions
that Require a CTR:
What to Include in a CTR:
Ensure the reporting of proper ID (driver's license, passport, military ID, government ID or alien registration card)
Be as exact as possible
Forward the CTR form to the BSA Officer
BSA Also Requires Information on
these Transactions which our
Systems do for You Automatically
Negotiable Instruments
All cash purchases between $3,000 and $10,000:
Corporate drafts
Cashier's checks
Money orders
Gift cards
Wire Transfers
All wire transfers in excess of $3,000, regardless of method of payment
Retain all wire documentation over $3,000 for five years
OFAC requires the following:
Block any accounts associated with specified countries, entities and individuals
Prohibit or reject unlicensed trade and financial transactions with specified countries, entities and individuals
Report blocked and prohibited transactions to OFAC
OFAC requirements are separate and distinct from BSA requirements
OFAC Covers Everything:
Opening new accounts
Wire and ACH transfers
Electronic Fund Transfers (EFT)
Cashing and depositing share drafts/checks
Purchase of cashier's checks
Dispensing loan proceeds and accepting loan payments
Existing members
Complying with BSA
Before a member is allowed to join:
- Gather COMPLETE information
- Name, address, birth date, etc.
- Remember that an address must be a physical address (no PO Box)
- Verify identity of all owners
- Check OFAC before any transactions
- Report any suspicious activity to the BSA Officer

Negligence = a fine up to $500
Practice of negligence = an additional fine of $50,000 per occurrence
Removal from and bar from the banking industry
Criminal fine up to $250,000, five years in prison, or both for
willful violations of the BSA and for structuring transactions to evade BSA reporting requirements
Criminal fine of up to $500,000, ten years in prison, or both
for violating BSA and any other U.S. law or engaging in a pattern of criminal activity
Civil money penalties
SARs CANNOT be discussed with the member!
Astera's CIP
Obtain and verify individuals' identities
Obtain and verify entities' existence
Obtain individual and entity SSN, ITIN, or EIN
Entities must be a US based business
Verification of names checked against OFAC
Physical address is also needed, even if PO Box mailing address
Documentation Required to open an account
Primary and Secondary documentation
Documentation required for a minor
Full transcript