Risk Management Manual of Examination Policies - FDIC

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BANK FRAUD AND INSIDER ABUSE Section 9.1 alert to rumors and gossip inside and outside the institution because in many cases, embezzlers and perpetrators of other frauds are betrayed by jealous peers or subordinates. Review any loans that do not appear to conform to the written loan policy. Determine the circumstances under which they were approved and who approved them. Each attempt to circumvent existing policies, controls and/or regulations should be investigated. Be alert to any overrides or attempted overrides of internal controls and determine who is responsible and the reason. Bank Fraud & Insider Abuse (4-98) 9.1-18 DSC Risk Management Manual of Examination Policies Federal Deposit Insurance Corporation
SUSPICIOUS ACTIVITY AND CRIMINAL VIOLATIONS Section 10.1 INTRODUCTION Criminal Conduct Undermines Public Confidence The public's confidence in the banking system is undermined when insured institutions are the victim of fraudulent and dishonest conduct, which, through fidelity insurance premiums, raise overall costs in the banking system. Confidence is especially harmed by insider abuse and fraud, which have been major contributing factors in a significant number of bank failures. When this occurs, the FDIC deposit insurance fund can suffer significant losses. If allegations of wrongdoing come to the Corporation’s attention, a prompt response is warranted. The scope of the response will vary based upon the source and credibility of the information, as well as the specificity of the allegations and documentation provided. Therefore, discretion and judgment are needed when determining an appropriate response. BANK MANAGEMENT’S ROLE Bank Management is Responsible for Preventing and Detecting Fraud and Insider Abuse The primary responsibility to prevent fraud and insider abuse rests with the board of directors and senior management. To properly execute their fiduciary duties, management must implement internal controls and other safeguards to prevent fraud and theft whether internally or externally perpetrated. But, even the best safeguards can be circumvented; therefore, systems also must be designed to detect suspicious activities. Once detected, suspicious activities must be reported. Suspicious Activity Reports Part 353 of the FDIC Rules and Regulations requires insured nonmember banks to report suspicious activities to the Financial Crimes Enforcement Network (FinCEN). The primary purpose of the reporting requirement is to assure that the information needed by investigators and prosecutors is provided in an orderly and timely fashion. Additionally, the reports enhance the FDIC’s ability to monitor and act to reduce losses suffered by insured nonmember banks as a result of suspicious activity. This report is to be made on a standard form used by all federally insured financial institutions called a Suspicious Activity Report (SAR). The SAR is designed to elicit the type of information deemed most important to law enforcement and bank regulatory agencies in assessing the activities and their effects. Preparing and Filing the Suspicious Activity Report Instructions for preparing the SAR are contained on the form itself and in Part 353. SARs shall be filed in the following situations: • Insider abuse involving any amount. • Transactions aggregating $5,000 or more where a suspect can be identified. • Transactions aggregating $25,000 or more regardless of potential suspects. • Transactions aggregating $5,000 or more that involve potential money laundering or violations of the Bank Secrecy Act. Financial institutions are required to file the SAR within 30 days of detecting the criminal activity; however, if management is unable to identify a suspect within 30 days, reporting may be delayed an additional 30 days or until a suspect is identified, whichever is sooner. In no case shall the reporting of a known or suspected crime of an unidentified suspect exceed 60 days from the detection date. Copies of related supporting documentation must be maintained by the institution and made available to law enforcement authorities upon request. A copy of the SAR and supporting documentation should be retained for five years. Management must notify the board of directors of any SAR filed in accordance with Part 353. In addition, the Board must record such notification in the minutes of the directors' meetings. "Safe Harbor" and Filing of Suspicious Activity Reports Federal law (31 U.S.C. 5318(g)(3)), provides that a financial institution, and its directors, officers, employees, and agents are provided protection from civil liability for reports of suspicious activities (including supporting documentation) made to appropriate authorities, regardless of whether such reports are filed pursuant to the SAR requirements or are filed voluntary on an alternative basis. Once a bank has filed a SAR, the related documentation is deemed filed with the SAR and may be made available to DSC Risk Management Manual of Examination Policies 10.1-1 Suspicious Activity and Criminal Violations (12-04) Federal Deposit Insurance Corporation
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DSC Risk Management Manual of Exami
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INDEX Section 0.1 Policies, Procedu
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INDEX Section 0.1 Liquidity Managem
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INDEX Section 0.1 Introduction 14.1
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BASIC EXAMINATION CONCEPTS AND GUID
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CAPITAL Section 2.1 INTRODUCTION Pu
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CAPITAL Section 2.1 Interests in As
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CAPITAL Section 2.1 the holder prio
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CAPITAL Section 2.1 • Qualifying
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CAPITAL Section 2.1 application sub
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CAPITAL Section 2.1 may leave the b
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CAPITAL Section 2.1 procedures empl
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CAPITAL Section 2.1 growth and rema
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ASSET QUALITY Section 3.1 INTRODUCT
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LOANS Section 3.2 INTRODUCTION The
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LOANS Section 3.2 Qualifications of
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LOANS Section 3.2 to the ALLL), an
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LOANS Section 3.2 PORTFOLIO COMPOSI
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LOANS Section 3.2 • Require reaso
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LOANS Section 3.2 Internal Controls
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LOANS Section 3.2 continue to suppo
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LOANS Section 3.2 board of director
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LOANS Section 3.2 the institution's
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LOANS Section 3.2 such as for lives
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LOANS Section 3.2 Classification Gu
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LOANS Section 3.2 checks; terms in
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LOANS Section 3.2 • Sublicensee B
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LOANS Section 3.2 similar propertie
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LOANS Section 3.2 policies and proc
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LOANS Section 3.2 Moreover, since t
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LOANS Section 3.2 generally should
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LOANS Section 3.2 exercise control
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LOANS Section 3.2 Problems in this
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LOANS Section 3.2 that reveal other
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LOANS Section 3.2 Other loans of qu
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LOANS Section 3.2 be determined whe
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LOANS Section 3.2 time period elaps
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LOANS Section 3.2 individual apprai
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LOANS Section 3.2 controls over its
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LOANS Section 3.2 consistent with t
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LOANS Section 3.2 such funds, the m
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LOANS Section 3.2 security interest
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LOANS Section 3.2 unambiguous terms
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LOANS Section 3.2 Trustees are sele
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LOANS Section 3.2 be valid but cert
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LOANS Section 3.2 Overview of the S
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LOANS Section 3.2 Although some ins
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LOANS Section 3.2 • Portfolio gro
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LOANS Section 3.2 pricing decisions
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LOANS Section 3.2 trends, condition
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LOANS Section 3.2 provide additiona
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SECURITIES AND DERIVATIVES Section
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CASH AND DUE FROM BANKS Section 3.4
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CASH AND DUE FROM BANKS Section 3.4
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PREMISES AND EQUIPMENT Section 3.5
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PREMISES AND EQUIPMENT Section 3.5
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OTHER REAL ESTATE Section 3.6 Under
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OTHER ASSETS AND LIABILITIES Sectio
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OFF-BALANCE SHEET ACTIVITIES Sectio
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MANAGEMENT Section 4.1 INTRODUCTION
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MANAGEMENT Section 4.1 consequently
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MANAGEMENT Section 4.1 overdue, ren
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MANAGEMENT Section 4.1 money launde
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MANAGEMENT Section 4.1 management l
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MANAGEMENT Section 4.1 • An adequ
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MANAGEMENT Section 4.1 • Troubled
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MANAGEMENT Section 4.1 management i
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INTERNAL ROUTINE AND CONTROLS Secti
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RELATED ORGANIZATIONS Section 4.3
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RELATED ORGANIZATIONS Section 4.3 c
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RELATED ORGANIZATIONS Section 4.3 U
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RELATED ORGANIZATIONS Section 4.3 i
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RELATED ORGANIZATIONS Section 4.3 A
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RELATED ORGANIZATIONS Section 4.3 c
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RELATED ORGANIZATIONS Section 4.3 S
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RELATED ORGANIZATIONS Section 4.3 w
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RELATED ORGANIZATIONS Section 4.3 r
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RELATED ORGANIZATIONS Section 4.3 A
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FIDELITY AND OTHER INDEMNITY PROTEC
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VIOLATIONS OF LAWS AND REGULATIONS
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VIOLATIONS OF LAWS AND REGULATIONS
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MISCELLANEOUS BANKING ACTIVITIES Se
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EARNINGS Section 5.1 structure will
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EARNINGS Section 5.1 demand is low)
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EARNINGS Section 5.1 2. Certain dir
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EARNINGS Section 5.1 capital and al
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LIQUIDITY AND FUNDS MANAGEMENT Sect
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SENSITIVITY TO MARKET RISK Section
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BANK SECRECY ACT, ANTI-MONEY LAUNDE
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Page 309 and 310: BANK SECRECY ACT, ANTI-MONEY LAUNDE
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INTERNATIONAL BANKING Section 11.1
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APPLICATIONS Section 12.1 Effective
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APPLICATIONS Section 12.1 for compa
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APPLICATIONS Section 12.1 be tantam
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APPLICATIONS Section 12.1 accept sh
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APPLICATIONS Section 12.1 consideri
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APPLICATIONS Section 12.1 accepted
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APPLICATIONS Section 12.1 The FDIC
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APPLICATIONS Section 12.1 employee
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APPLICATIONS Section 12.1 including
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APPLICATIONS Section 12.1 Branch cl
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APPLICATIONS Section 12.1 its accep
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APPLICATIONS Section 12.1 examinati
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MEMORANDUMS OF UNDERSTANDING Sectio
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CIVIL MONEY PENALTIES Section 14.1
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CMP MATRIX (Continued) Points Sugge
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FORMAL ADMINISTRATIVE ACTIONS Secti
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REPORT OF EXAMINATION INSTRUCTIONS
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BANK OF ANYTOWN ANYTOWN ANY COUNTY
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Examination Conclusions and Comment
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Risk Management Assessment 99999 1.
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Violations of Laws and Regulations
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Information Technology Assessment (
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Fiduciary Activities Assessment (Co
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Comparative Statements of Financial
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Recapitulation of Securities 99999
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Items Subject to Adverse Classifica
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Analysis of Loans Subject to Advers
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Assets with Credit Data or Collater
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Capital Calculations 99999 Tier 1 C
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Comparative Statements of Income an
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Extensions of Credit to Directors/T
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Confidential - Supervisory Section
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In-House Information Technology 999
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Directors/Trustees and Officers 999
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INTERNATIONAL REPORT PAGES AND WORK
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Analysis of the Country Exposure Ma
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International Loans, Acceptances, a
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International Loans, Acceptances, a
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Foreign Exchange Activities 99999 N
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Position Analysis - Other Currencie
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Revaluation and Income/Loss Analysi
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Policy and Procedures 99999 1. (a)
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Policy and Procedures (Continued) 9
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Audit and Internal Controls - Inter
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Parallel-Owned Banking Organization
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REPORT OF INVESTIGATION INSTRUCTION
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FDIC Report of Investigation THIS R
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Description of the Transaction INVE
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FINANCIAL HISTORY AND CONDITION Ass
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FINANCIAL HISTORY AND CONDITION (Co
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ADEQUACY OF THE CAPITAL STRUCTURE G
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ADEQUACY OF THE CAPITAL STRUCTURE (
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FUTURE EARNINGS PROSPECTS Assess th
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FUTURE EARNINGS PROSPECTS (Continue
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GENERAL CHARACTER OF THE MANAGEMENT
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IV. GENERAL CHARACTER OF THE MANAGE
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Interview Comments IV. GENERAL CHAR
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RISK TO THE FUNDS As a general matt
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VI. CONVENIENCE AND NEEDS OF THE CO
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OTHER PERTINENT INFORMATION If appl
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Source: Application for Federal Dep
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Service Continuity & Monitoring OTH
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