BSA/AML Examination Manual - ffiec

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Special Measures — Overview Special Measures — Overview Objective. Assess the bank’s compliance with statutory and regulatory requirements for special measures issued under section 311 of the Patriot Act. Section 311 of the Patriot Act added 31 USC 5318A to the BSA, which authorizes the Secretary of the Treasury to require domestic financial institutions and domestic financial agencies to take certain special measures against foreign jurisdictions, foreign financial institutions, classes of international transactions, or types of accounts of primary money laundering concern. Section 311 provides the Secretary of the Treasury with a range of options that can be adapted to target specific money laundering and terrorist financing concerns. Section 311 is implemented through various orders and regulations that are incorporated into 31 CFR 103. 116 As set forth in section 311, certain special measures may be imposed by an order without prior public notice and comment, but such orders must be of limited duration and must be issued together with a Notice of Proposed Rulemaking. Section 311 establishes a process for the Secretary of the Treasury to follow, and identifies federal agencies to consult before the Secretary of the Treasury may conclude that a jurisdiction, financial institution, class of transactions, or type of account is of primary money laundering concern. The statute also provides similar procedures, including factors and consultation requirements, for selecting the specific special measures to be imposed against a jurisdiction, financial institution, class of transactions, or type of account that is of primary money laundering concern. It is important to note that, while a jurisdiction, financial institution, class of transactions, or type of account may be designated of primary money laundering concern in an order issued together with a Notice of Proposed Rulemaking, special measures of unlimited duration can only be imposed by a final rule issued after notice and an opportunity for comment. Types of Special Measures The following five special measures can be imposed, either individually, jointly, or in any combination: Recordkeeping and Reporting of Certain Financial Transactions Under the first special measure, banks may be required to maintain records or to file reports, or both, concerning the aggregate amount of transactions or the specifics of each transaction with respect to a jurisdiction, financial institution, class of transactions, or type of account that is of primary money laundering concern. The statute contains 116 Notices of proposed rulemaking and final rules accompanying the determination “of primary money laundering concern,” and imposition of a special measure(s) pursuant to section 311 of the Patriot Act are available on the FinCEN web site: www.fincen.gov. FFIEC BSA/AML Examination Manual 128 8/24/2007
Special Measures — Overview minimum information requirements for these records and reports and permits the Secretary of the Treasury to impose additional information requirements. Information Relating to Beneficial Ownership Under the second special measure, banks may be required to take reasonable and practicable steps, as determined by the Secretary of the Treasury, to obtain and retain information concerning the beneficial ownership of any account opened or maintained in the United States by a foreign person (other than a foreign entity whose shares are subject to public reporting requirements or are listed and traded on a regulated exchange or trading market), or a representative of such foreign person, that involves a jurisdiction, financial institution, class of transactions, or type of account that is of primary money laundering concern. Information Relating to Certain Payable Through Accounts Under the third special measure, banks that open or maintain a payable through account in the United States involving a jurisdiction, financial institution, class of transactions, or type of account that is of primary money laundering concern may be required (i) to identify each customer (and representative) who is permitted to use the account or whose transactions are routed through the account and (ii) to obtain information about each customer (and representative) that is substantially comparable to that which the bank obtains in the ordinary course of business with respect to its customers residing in the United States. 117 Information Relating to Certain Correspondent Accounts Under the fourth special measure, banks that open or maintain a correspondent account in the United States involving a jurisdiction, financial institution, class of transactions, or type of account that is of primary money laundering concern may be required to: (i) identify each customer (and representative) who is permitted to use the account or whose transactions are routed through the account; and (ii) obtain information about each such customer (and representative) that is substantially comparable to that which a United States depository institution obtains in the ordinary course of business with respect to its customers residing in the United States. 118 Prohibitions or Conditions on Opening or Maintaining Certain Correspondent or Payable Through Accounts Under the fifth, and strongest, special measure, banks may be prohibited from opening or maintaining in the United States any correspondent account or payable through account for, or on behalf of, a foreign financial institution if the account involves a jurisdiction, 117 Refer to expanded overview section, “Payable Through Accounts,” page 178, for additional guidance. 118 Refer to core overview section, “Foreign Correspondent Account Recordkeeping and Due Diligence,” page 106, and expanded overview section, “Correspondent Accounts (Foreign),” page 170, for additional guidance. FFIEC BSA/AML Examination Manual 129 8/24/2007
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Bank Secrecy Act / Anti-Money Laund
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Table of Contents EXPANDED EXAMINAT
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INTRODUCTION Introduction This Fede
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Background Introduction In 1970, Co
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Introduction institutions, such as
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Introduction proliferation of weapo
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Introduction Although the motivatio
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Scoping and Planning — Overview C
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Scoping and Planning — Overview T
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Scoping and Planning — Examinatio
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Scoping and Planning — Examinatio
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BSA/AML Risk Assessment — Overvie
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Analysis of Specific Risk Categorie
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BSA/AML Risk Assessment — Examina
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BSA/AML Compliance Program — Over
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BSA/AML Compliance Program — Exam
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Developing Conclusions and Finalizi
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Developing Conclusions and Finalizi
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Customer Identification Program —
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Customer Information Required Custo
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Transaction Testing Customer Identi
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Customer Due Diligence — Overview
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Customer Due Diligence — Examinat
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Suspicious Activity Reporting — O
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Law Enforcement Inquiries and Reque
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Timing of a SAR Filing Suspicious A
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Suspicious Activity Reporting — E
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Suspicious Activity Reporting — E
Page 81 and 82: Currency Transaction Reporting —
Page 83 and 84: Currency Transaction Reporting —
Page 85 and 86: Currency Transaction Reporting Exem
Page 87 and 88: • Operating a pawn brokerage. Cur
Page 89 and 90: Currency Transaction Reporting Exem
Page 91 and 92: Information Sharing — Overview In
Page 93 and 94: Information Sharing — Overview su
Page 95 and 96: Information Sharing — Overview es
Page 97 and 98: Copies of section 314(a) requests.
Page 99 and 100: Purchase and Sale of Monetary Instr
Page 101 and 102: Purchase and Sale of Monetary Instr
Page 103 and 104: Funds Transfers Recordkeeping — O
Page 105 and 106: Funds Transfers Recordkeeping — O
Page 107 and 108: Responsibilities of Beneficiary’s
Page 109 and 110: Funds Transfers Recordkeeping — E
Page 111 and 112: Foreign Correspondent Account Recor
Page 125 and 126: Private Banking Due Diligence Progr
Page 131: Private Banking Due Diligence Progr
Page 135 and 136: Examination Procedures Special Meas
Page 137 and 138: Foreign Bank and Financial Accounts
Page 139 and 140: International Transportation of Cur
Page 141 and 142: Office of Foreign Assets Control
Page 153 and 154: Enterprise-Wide BSA/AML Compliance
Page 159 and 160: Corporate management. Enterprise-Wi
Page 161 and 162: Foreign Branches and Offices of U.S
Page 167 and 168: Examination Procedures Parallel Ban
Page 169 and 170: Correspondent Accounts (Domestic)
Page 175 and 176: Correspondent Accounts (Foreign)
Page 177 and 178: Correspondent Accounts (Foreign)
Page 179 and 180: U.S. Dollar Drafts — Overview U.S
Page 181 and 182: U.S. Dollar Drafts — Examination
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Payable Through Accounts — Overvi
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Payable Through Accounts — Examin
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Payable Through Accounts — Examin
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Risk Mitigation Pouch Activities
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Pouch Activities — Examination Pr
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Electronic Banking — Overview lin
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Examination Procedures Electronic B
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Funds Transfers — Overview and on
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Funds Transfers — Overview busine
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Examination Procedures Funds Transf
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Automated Clearing House Transactio
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Transaction Testing Automated Clear
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Electronic Cash — Overview Using
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Third-Party Payment Processors —
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Third-Party Payment Processors —
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Purchase and Sale of Monetary Instr
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Brokered Deposits — Overview Brok
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Examination Procedures Brokered Dep
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Privately Owned Automated Teller Ma
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• Expected account activity, incl
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Privately Owned ATMs — Examinatio
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Nondeposit Investment Products —
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Nondeposit Investment Products —
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− Holdings in excess of the custo
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Insurance — Overview its insuranc
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Examination Procedures Insurance In
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Concentration Accounts — Overview
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Concentration Accounts — Examinat
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Lending Activities — Overview bus
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Trade Finance Activities — Overvi
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Risk Mitigation Trade Finance Activ
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Trade Finance Activities — Overvi
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Private Banking — Overview Privat
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Customer Risk Assessment Private Ba
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Private Banking — Overview determ
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Offshore entities. Cash-intensive b
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Trust and Asset Management Services
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• The type of trust or agency acc
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Transaction Testing Trust and Asset
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Nonresident Aliens and Foreign Indi
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Nonresident Aliens and Foreign Indi
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Politically Exposed Persons — Ove
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Politically Exposed Persons — Ove
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Politically Exposed Persons — Exa
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Embassy and Foreign Consulate Accou
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Embassy and Foreign Consulate Accou
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Non-Bank Financial Institutions —
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Professional Service Providers —
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Professional Service Providers —
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Non-Governmental Organizations and
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Non-Governmental Organizations and
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Business Entities (Domestic and For
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Risk Factors Business Entities (Dom
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Cash-Intensive Businesses — Overv
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Appendix A: BSA Laws and Regulation
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Appendix B: BSA/AML Directives Appe
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Web Sites Appendix C: BSA/AML Refer
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Appendix C: BSA/AML References •
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Appendix D: Statutory Definition of
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Appendix E: International Organizat
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Appendix F: Money Laundering and Te
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Privately Owned Automated Teller Ma
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Funds Transfers Appendix F: Money L
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Appendix G: Structuring However, tw
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Appendix H: Request Letter Items (C
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Expanded Examination Procedures App
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Parallel Banking _ List any paralle
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Appendix I: Risk Assessment Link to
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Appendix J: Quantity of Risk Matrix
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Appendix K: Customer Risk versus Du
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When did the suspicious activity ta
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Low No history of OFAC actions. No
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Appendix O: Examiner Tools for Tran
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Appendix O: Examiner Tools for Tran
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Signature Cards Appendix P: BSA Rec
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Name and address of the beneficiary
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Appendix P: BSA Record Retention Re
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Acronym or abbreviation Full name E
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Acronym or abbreviation Full name N
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Appendix R: Enforcement Guidance Ap
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Appendix R: Enforcement Guidance As
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Appendix R: Enforcement Guidance ex
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Appendix R: Enforcement Guidance FF
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Backfiling. See Currency Transactio
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overview, 165-167 request letter it
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money services businesses, 279 nond
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Export Administration Act of 1979,
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Index 314(a) record searches, 88 Cu
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Index for a BSA/AML compliance prog
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guidance on providing banking servi
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247, 253, H-15 Offshore Financial C
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Purchase and Sale of Monetary Instr
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trade finance activities, H-14 trus
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enterprise-wide, 149-150, 152, 153
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U United Nations, 7, 137 Updating O
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