Risk Management Manual of Examination Policies - FDIC

BANK SECRECY ACT, ANTI-MONEY LAUNDERING,
AND OFFICE OF FOREIGN ASSETS CONTROL
into an account. The customer then requests a large
outgoing wire to another institution or country.
• Accounts used as a temporary repository for funds.
The customer appears to use an account as a
temporary repository for funds that ultimately will be
transferred out of the financial institution, sometimes
to foreign-based accounts. There is little account
activity.
• Funds deposited into several accounts, transferred
to another account, and then transferred outside of
the U.S. This involves the deposit of funds into
several accounts, which are then combined into one
account, and ultimately transferred outside the U.S.
This activity is usually not consistent with the known
legitimate business of the customer.
• Disbursement of certificates of deposit by multiple
bank checks. A customer may request disbursement
of the proceeds of a certificate of deposit or other
investments in multiple bank checks, each at or under
$10,000. The customer can then negotiate these
checks elsewhere for currency. The customer avoids
the CTR requirements and severs the paper trail.
• Early redemption of certificates of deposits. A
customer may request early redemption of certificates
of deposit or other investments within a relatively
short period of time from the purchase date of the
certificate of deposit or investment. The customer
may be willing to lose interest and incur penalties as a
result of the early redemption.
• Sudden, unexplained increase in account activity or
balance. There may be a sudden, unexplained
increase in account activity, both from cash and from
non-cash items. An account may be opened with a
nominal balance that subsequently increases rapidly
and significantly.
• Limited use of services. Frequent large cash deposits
are made by a corporate customer, who maintains high
balances but does not use the financial institution’s
other services.
• Inconsistent deposit and withdrawal activity.
Retail businesses may deposit numerous checks, but
there will rarely be withdrawals for daily operations.
• Strapped currency. Frequent deposits of large
amounts of currency, wrapped in currency straps that
have been stamped by other financial institutions.
Section 8.1
• Client, trust and escrow accounts. Substantial cash
deposits by a professional customer into client
accounts, or in-house company accounts, such as trust
and escrow accounts.
• Large amount of food stamps. Unusually large
deposits of food stamps, which may not be consistent
with the customer’s legitimate business.
Lending
• Certificates of deposits used as collateral. An
individual buys certificates of deposit and uses them as
loan collateral. Illegal funds can be involved in either
the certificate of deposit purchase or utilization of loan
proceeds.
• Sudden/unexpected payment on loans. A customer
may suddenly pay down or pay off a large loan, with
no evidence of refinancing or other explanation.
• Reluctance to provide the purpose of the loan or
the stated purpose is ambiguous. A customer
seeking a loan with no stated purpose may be trying to
conceal the true nature of the loan. The BSA requires
the bank to document the purpose of all loans over
$10,000, with the exception of those secured by real
property.
• Inconsistent or inappropriate use of loan proceeds.
There may be cases of inappropriate disbursement of
loan proceeds, or disbursements for purposes other
than the stated loan purpose.
• Overnight loans. A customer may use “overnight”
loans to create high balances in accounts.
• Loan payments by third parties. Loans that are paid
by a third party could indicate that the assets securing
the loan are really those of a third party, who may be
attempting to conceal ownership of illegally, gained
funds.
• Loan proceeds used to purchase property in the
name of a third party, or collateral pledged by a
third party. A customer may use loan proceeds to
purchase, or may pledge as collateral, real property in
the name of a trustee, shell corporation, etc.
• Permanent mortgage financing with an unusually
short maturity, particularly in the case of large
mortgages.
Bank Secrecy Act (12-04) 8.1-42 DSC Risk Management Manual of Examination Policies
Federal Deposit Insurance Corporation