Risk Management Manual of Examination Policies - FDIC

BANK SECRECY ACT, ANTI-MONEY LAUNDERING,
AND OFFICE OF FOREIGN ASSETS CONTROL
• Failure to report Suspicious Activities, such as deposit
layering or structuring cash transactions;
• Failure to reasonably identify and verify customer
identity; and
• Failure to maintain adequate documentation of
financial transactions, such as the purchase or sale of
monetary instruments and originating or receiving wire
transfers.
All apparent violations of the BSA should be reported in
the Violations of Laws and Regulations pages of the
Report of Examination. When preparing written
comments related to apparent violations cited as a result of
deficient BSA compliance practices, the following
information should be included in each citation:
• Reference to the appropriate section of the regulation;
• Nature of the apparent violation;
• Date(s) and amount of the transaction(s);
• Name(s) of the parties to the transaction;
• Description of the transaction; and
• Management’s response, including planned or taken
corrective action.
In preparing written comments for apparent violations of
the BSA, examiners should focus solely on statements of
fact, and take precautions to ensure that subjective
comments are omitted. Such statements would include an
examiner attributing the infraction to a cause, such as
management oversight or computer error. For all
violations of 31 CFR 103, the Treasury reserves the
authority to determine if civil penalties should be pursued.
Examiner comments on the supposed causes of apparent
violations may affect the Treasury’s ability to pursue a
case.
Random, isolated apparent violations do not require
lengthy explanations or write-ups in the Report of
Examination. In such cases, the section of the regulation
violated, and identification of the transaction and/or
instance will suffice. Examiners are also encouraged to
group violations by type. When there are several
exceptions to a particular section of the regulation, for
example, late CTR filing, examiners should include a
minimum of three examples in the Report of Examination
citation. The remainder of the violations under that
specific regulation can be listed as a total, without detailing
all of the information. For example, detail three late CTR
filings with customer information, dates, and amounts, but
list a total in the apparent violation write-up for 55
instances identified during the examination.
If an examiner chooses not to include each example in the
apparent violation citation, the examiners should provide
Section 8.1
bank management with a separate list so that they can
identify and, if possible, correct the particular violation. A
copy of the list must also be maintained in the BSA
examination workpapers.
Additionally, deficient practices may violate more than one
regulation. In such circumstances, the apparent violations
can be grouped together. However, all of the sections of
each violated regulation must be cited. Each apparent
violation must be recorded on the BSA Data Entry sheet
and submitted with the Report of Examination for review
and transmittal.
Apparent Violations of Section 326.8 of the FDIC Rules
and Regulations
In situations where deficiencies in the BSA compliance
program are serious or systemic in nature, or apparent
violations result from management’s inability or
unwillingness to develop and administer an effective BSA
compliance program, examiners should cite an apparent
violation(s) of the appropriate subsection(s) of Section
326.8, within the Report of Examination. Additionally,
apparent violations of 31 CFR 103 that are repeated at two
or more examinations, or dissimilar apparent violations
that are recurring over several examinations, may also
point towards a seriously deficient compliance program.
When such deficiencies persist within the financial
institution, it may be appropriate for examiners to consider
the overall program to be deficient and cite an apparent
violation of Section 326.8.
Specifically, an apparent violation of Section 326.8(b)(1)
should be cited when the weaknesses and deficiencies
identified in the BSA compliance program are significant,
repeated, or pervasive. Citing a Section 326.8(b)(1)
violation indicates that the program is inadequate or
substantially ineffective. Furthermore, these deficiencies,
if uncorrected, significantly impair the institution’s ability
to detect and prevent potential money laundering or
terrorist financing activities.
An apparent violation of Section 326.8(b)(2) should be
cited when weaknesses and deficiencies cited in the
Customer Identification Program mitigate the institution’s
ability to reasonably establish, verify and record customer
identity. An apparent violation of 326.8(b)(2) would
generally be associated with specific weaknesses that
would be reflected in apparent violations of 31 CFR
103.121, which establishes the minimum requirements for
Customer Identification Programs.
An apparent violation of Section 326.8(c) should be cited
for a specific program deficiency to the extent that
Bank Secrecy Act (12-04) 8.1-34 DSC Risk Management Manual of Examination Policies
Federal Deposit Insurance Corporation