Risk Management Manual of Examination Policies - FDIC

BANK SECRECY ACT, ANTI-MONEY LAUNDERING,
AND OFFICE OF FOREIGN ASSETS CONTROL
• Transactions aggregating $5,000 or more when the
suspect can be identified;
• Transactions aggregating $25,000 or more when the
suspect can not be identified; and
• Transactions aggregating $5,000 or more that involve
money laundering or violations of the BSA… if the
bank knows, suspects, or has reason to suspect that:
o The transaction involves funds derived from
illegal activities,
o The transaction is designed to evade BSA
reporting requirements, or
o The transaction has no business or apparent
lawful purpose or is not the sort of
transaction in which the particular customer
would normally be expected to engage, and
the bank knows of no reasonable explanation
for the transaction after examining the
available facts, including the background and
possible purpose of the transaction.
Management failed to file SARs on several different
deposit account customers, all of which appeared to be
structuring cash deposits to avoid the filing of CTRs.
These transactions all appeared on large cash transaction
reports reviewed by management; however, no one in the
institution researched the transactions or filed SARs on the
incidents. Management must file SARs on the following
customer transactions and appropriately review suspicious
activity and file necessary SARs going forward.
Account Number Dates Total Cash Deposited
123333 02/20/xx-02/28/xx $50,000
134445 03/02/xx-03/15/xx $32,300
448832 01/05/xx-03/10/xx $163,500
878877 03/10/xx-03/27/xx $201,000
Part 353.3(b) of the FDIC Rules and Regulations and
31 C.F.R. 103.18(b)(3)
Part 353.3(b) of the FDIC Rules and Regulations and 31
C.F.R. 103.18(b)(3) state that a bank shall file a suspicious
activity report (SAR) no later than 30 calendar days after
the date of initial detection of facts that may constitute a
basis for filing a SAR. In no case shall reporting be
delayed more than 60 calendar days after the date of initial
detection.
Management and the board have failed to file several
hundred SARs within 30 calendar days of the initial
detection of the suspicious activity. The BSA officer failed
to file any SARs for the time period of June through
August 20XX. This information was verified through use
of the FinCEN database, which showed than no SARs had
been filed during that time period. In addition, SARs filed
Section 8.1
from February through May of 20XX were filed between
65 days and 82 days of the initial detection of the activity.
Management must ensure that suspicious activity reports
are not only identified, but also filed in a timely manner.
Part 353.3(f) of the FDIC Rules and Regulations
Part 353.3(f) of the FDIC Rules and Regulations states that
bank management must promptly notify its board of
directors, or a committee thereof, of any report filed
pursuant to Part 353 (Suspicious Activity Reports).
Management has not properly informed the board of
directors of SARs filed to report suspicious activities. The
management team has provided the board with erroneous
reports showing that the bank has filed SARs, when, in
fact, the management team never did file such SARs.
Board and committee minutes clearly indicate a reliance on
these reports as accurate.
31 C.F.R. 103.22(c)(2)
This section of the Financial Recordkeeping Regulations
requires the bank to treat multiple transactions totaling
over $10,000 as a single transaction.
Management’s large cash aggregation reports include only
those cash transactions above $9,000. Because of this
weakness in the reporting system’s set-up, the report failed
to pick up transactions below $9,000 from multiple
accounts with one owner. The following transactions were
identified which should have been aggregated and a CTR
filed. Management needs to alter or improve their system
in order to identify such transactions.
Customer Name Date Amount
Account #
Mini Meat Market
122222222 12/12/xx $8,000
122233333 12/12/xx $4,000
122222222 12/16/xx $6,000
122233333 12/16/xx $5,000
Claire’s Club Sandwiches
a/k/a Claire’s Catering
15555555 12/22/xx $4,000
17777777 12/22/xx $7,000
17777788 12/22/xx $3,000
31 C.F.R. 103.22(d)(6)(i)
This section of the Financial Recordkeeping regulation
states that a bank must document monitoring of exempt
Bank Secrecy Act (12-04) 8.1-54 DSC Risk Management Manual of Examination Policies
Federal Deposit Insurance Corporation