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Bank Secrecy Act Training 2013

For Employees

Andrea Schultz

on 31 October 2013

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Transcript of Bank Secrecy Act Training 2013

Training 2013
Bank Secrecy Act
What is the Bank Secrecy Act?
Federal Law, enacted by Congress in 1970, where Financial Institutions assist the government in detecting and preventing money laundering; 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
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)
Used to report CASH transactions over $10,000 in one business day
Member Identification Program
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.
A Member Identification Program
Has written policies and procedures in place to obtain identifying data.
Types of Suspicious Activity
Structuring - changing the amount of the transaction to evade filing a CTR.
More Types of Suspicious Activity
Exchanging small denomination bills for large denomination bills
When there are multiple cash transactions totaling more than $10,000 in one business day
Transactions include:
Deposits, withdrawals, payments or exchanges
Report transaction to Bank Secrecy Officer immediately.
Bank Secrecy Officer must file Suspicious Activity Report with Financial Crimes Enforcement Network (FinCEN) within 30 days of discovering activity.
The information is CONFIDENTIAL! Don't tell person suspected.
A copy of the SAR and supporting documents must be retained for 5 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.
Smurfing - multiple transactions of less than $10,000, but totaling over $10,000 over consecutive or near consecutive days.
Member refuses to provide information for Currency Transaction Report
Identity Theft
What others can you think of?
The purpose of the MIP is to prevent, detect, and prosecute terrorism and international money laundering.
Verifies the member's identity.
Maintains records of identification used to verify the identity of an individual and keep these records on file for 5 years after an account is closed.
Determines if member appears on any lists of suspected or known terrorists.
Notifies potential members of these requirements.
Reduces the Credit Union's risk of losses from fraud and other crimes.
Protects members from becoming victims of identity theft.
USA Patriot Act
Uniting and
Signed into Law in 2001
USA Patriot Act gives law enforcement agencies the ability to search telephone, email communications, medical, financial and other records in the fight against money laundering.
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 from legal activities.
Money Laundering is...
Money Laundering can involve
3 independent steps:
Placement - the process of depositing unlawful cash proceeds into an account at a financial institution.
Layering - 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.
Integration - 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.
Monetary Instruments
A Monetary Instrument Application is used to record the cash purchase of:
Official Bank Checks
Teller Checks
Money Orders
Visa Gift Cards
Visa Travel Money
The application must be filled out when any of the items above are purchased with cash totaling from $3,000 to $10,000 inclusive.
Records are retained for 5 years.
Funds Transfers
Maintain records of all "funds" transfers in the amount of $3,000 or more.
You must complete an INTERNAL TRANSFER FORM when the money is transferred from one person to another or one account to another when the member is not a joint owner on both accounts.
Don't forget to send the completed form to the Accounting Department!
Wire Transfers
The Credit Union's Accounting Department is responsible for screening all OUTGOING WIRES against the OFAC list for potential terrorists and Another Corporate FCU is responsible for screening all INCOMING WIRES.
Office of Foreign Assets Control
OFAC is a division of the US Treasury that administers and enforces sanctions against:
Countries, organizations, and individuals 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 of $5,000 or more (outgoing wire transfers, payees of Credit Union issued checks and "On-us" checks).
If there is a match...
1. Blocks the funds immediately
2. Reports the blocking to OFAC within 10 days
3. Acts on instructions given by OFAC
Noncompliance with the BSA
Civil Penalty
Criminal Penalty
Civil Penalties
Are the result of a financial institution failing to comply with the Bank Secrecy Act
Are the result of doing business with one of the sanctioned countries
Negligence = a fine up to $500
Willful violation = a fine ranging from $25,000 to $1,000,000
Practice of Negligence = an additional fine of $50,000 per occurrence
Criminal Penalties
Are the result of a Credit Union employee assisting a member in structuring transactions to avoid reporting and record keeping requirements.
Willful violation = a fine of up to $500,000 or up to 10 years in prison or both...
What is YOUR responsibility?
Verify identity of individual opening a new account
Complete Currency Transaction Report (CTR)
Report Suspicious Activity
Report purchase of monetary instruments
Wire (Funds) transfer reporting
OFAC verification
Be aware of all policies and procedures related to the Bank Secrecy Act and attend ANNUAL training
When do we file a CTR?
Electronic filing of a Currency Transaction Report must be completed with the Financial Crimes Enforcement Network (FinCEN) no later than 15 days after the transaction.
The amount of the transaction has to be reported to the FinCEN in a whole dollar amount.
Example - A transaction for $10,001.89
Equals a Report of $10,002.00
It is NOT a secret...
You may inform the member about the
Currency Transaction Report filing
A copy of the CTR should be retained for 5 years.
OFAC Forbids financial institutions to do business
North Korea
Sierra Leone
The Balkans
with these sanctioned countries
5. Member Identification Program - verifying
identity of individual opening new account
4. Independent Testing - outside auditors review
the Credit Union's policies and procedures
3. Annual Training for All Staff
2. Bank Secrecy Officer
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 USA Patriot Act, Anti-Money Laundering is the new name for Suspicious Activity.
The Bank Secrecy Officer
Full transcript