BSA/AML Examination Manual - ffiec

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Pouch Activities — Overview Pouch Activities — Overview Objective. Assess the adequacy of the bank’s systems to manage the risks associated with pouch activities, and management’s ability to implement effective monitoring and reporting systems. Pouch activity entails the use of a carrier, courier (either independent or common), or a referral agent employed by the courier, 157 to transport currency, monetary instruments, and other documents from outside the United States to a bank in the United States. 158 Pouches can be sent by another bank or individuals. Pouch services are commonly offered in conjunction with foreign correspondent banking services. Pouches can contain loan payments, transactions for demand deposit accounts, or other types of transactions. Risk Factors Banks should be aware that bulk amounts of monetary instruments purchased in the United States that appear to have been structured to avoid the BSA-reporting requirements often have been found in pouches or cash letters received from foreign financial institutions. This is especially true in the case of pouches and cash letters received from jurisdictions with lax or deficient AML structures. The monetary instruments involved are frequently money orders, traveler’s checks, and bank checks that usually have one or more of the following characteristics in common: • The instruments were purchased on the same or consecutive days at different locations. • They are numbered consecutively in amounts just under $3,000 or $10,000. • The payee lines are left blank or made out to the same person (or to only a few people). • They contain little or no purchaser information. • They bear the same stamp, symbol, or initials. • They are purchased in round denominations or repetitive amounts. • The depositing of the instruments is followed soon after by a funds transfer out in the same dollar amount. 157 Referral agents are foreign individuals or corporations, contractually obligated to the U.S. bank. They provide representative-type services to the bank’s clients abroad for a fee. Services can range from referring new customers to the bank, to special mail handling, obtaining and pouching documents, distributing the bank’s brochures and applications or forms, notarizing documents for customers, and mailing customers’ funds to the bank in the United States for deposit. 158 For additional guidance, refer to core overview section, “International Transportation of Currency or Monetary Instruments Reporting,” page 134. FFIEC BSA/AML Examination Manual 184 8/24/2007
Risk Mitigation Pouch Activities — Overview Banks should have policies, procedures, and processes related to pouch activity that should: • Outline criteria for opening a pouch relationship with an individual or a foreign financial institution (e.g., customer due diligence requirements, type of institution or person, acceptable purpose of the relationship). • Detail acceptable and unacceptable transactions (e.g., monetary instruments with blank payees, unsigned monetary instruments, and a large number of consecutively numbered monetary instruments). • Detail procedures for processing the pouch, including employee responsibilities, dual control, reconciliation and documentation requirements, and employee sign off. • Detail procedures for reviewing for unusual or suspicious activity, including elevating concerns to management. (Contents of pouches may be subject to Currency Transaction Report (CTR), Report of International Transportation of Currency or Monetary Instruments (CMIR), and Suspicious Activity Report (SAR) reporting requirements.) • Discuss criteria for closing pouch relationships. The above factors should be included within an agreement or contract between the bank and the courier that details the services to be provided and the responsibilities of both parties. FFIEC BSA/AML Examination Manual 185 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
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Currency Transaction Reporting —
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Currency Transaction Reporting —
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Currency Transaction Reporting Exem
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• Operating a pawn brokerage. Cur
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Currency Transaction Reporting Exem
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Information Sharing — Overview In
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Information Sharing — Overview su
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Information Sharing — Overview es
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Copies of section 314(a) requests.
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Purchase and Sale of Monetary Instr
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Funds Transfers Recordkeeping — O
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Funds Transfers Recordkeeping — O
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Responsibilities of Beneficiary’s
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Funds Transfers Recordkeeping — E
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Foreign Correspondent Account Recor
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Private Banking Due Diligence Progr
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Special Measures — Overview minim
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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
Page 183 and 184: Payable Through Accounts — Overvi
Page 185 and 186: Payable Through Accounts — Examin
Page 187: Payable Through Accounts — Examin
Page 191 and 192: Pouch Activities — Examination Pr
Page 193 and 194: Electronic Banking — Overview lin
Page 195 and 196: Examination Procedures Electronic B
Page 197 and 198: Funds Transfers — Overview and on
Page 199 and 200: Funds Transfers — Overview busine
Page 201 and 202: Examination Procedures Funds Transf
Page 203 and 204: Automated Clearing House Transactio
Page 209 and 210: Transaction Testing Automated Clear
Page 211 and 212: Electronic Cash — Overview Using
Page 213 and 214: Third-Party Payment Processors —
Page 215 and 216: Third-Party Payment Processors —
Page 217 and 218: Purchase and Sale of Monetary Instr
Page 219 and 220: Brokered Deposits — Overview Brok
Page 221 and 222: Examination Procedures Brokered Dep
Page 223 and 224: Privately Owned Automated Teller Ma
Page 225 and 226: • Expected account activity, incl
Page 227 and 228: Privately Owned ATMs — Examinatio
Page 229 and 230: Nondeposit Investment Products —
Page 231 and 232: Nondeposit Investment Products —
Page 233 and 234: − Holdings in excess of the custo
Page 235 and 236: Insurance — Overview its insuranc
Page 237 and 238: 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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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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