BSA/AML Examination Manual - ffiec

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Examination Procedures Private Banking Private Banking — Examination Procedures Objective. Assess the adequacy of the bank’s systems to manage the risks associated with private banking activities, and management’s ability to implement effective due diligence, monitoring, and reporting systems. This section expands the core review of the statutory and regulatory requirements of private banking in order to provide a broader assessment of the AML risks associated with this activity. 1. Review the policies, procedures, and processes related to private banking activities. Evaluate the adequacy of the policies, procedures, and processes given the bank’s private banking activities and the risks they represent. Assess whether the controls are adequate to reasonably protect the bank from money laundering and terrorist financing. 2. From a review of management information systems (MIS) reports (e.g., customer aggregation, policy exception and missing documentation, customer risk classification, unusual accounts activity, and client concentrations) and internal risk rating factors, determine whether the bank effectively identifies and monitors private banking relationships, particularly those that pose a higher risk for money laundering. 3. Determine whether the bank’s system for monitoring private banking relationships for suspicious activities, and for reporting of suspicious activities, is adequate given the bank’s size, complexity, location, and types of customer relationships. 4. Review the private banking compensation program. Determine whether it includes qualitative measures that are provided to employees to comply with account opening and suspicious activity monitoring and reporting requirements. 5. Review the monitoring program the bank uses to oversee the private banking relationship manager’s personal financial condition and to detect any inappropriate activities. 6. If appropriate, refer to the core examination procedures, “Office of Foreign Assets Control,” page 146, for guidance. Transaction Testing 7. On the basis of the bank’s risk assessment of its private banking activities, as well as prior examination and audit reports, select a sample of private banking accounts. The sample should include the following types of accounts: Politically exposed persons (PEPs). Private Investment Companies (PICs), international business corporations (IBCs), and shell companies. FFIEC BSA/AML Examination Manual 252 8/24/2007
Offshore entities. Cash-intensive businesses. Import or export companies. Private Banking — Examination Procedures Customers from or doing business in a high-risk geographic location. Customers listed on unusual activity monitoring reports. Customers who have large dollar transactions and frequent funds transfers. 8. From the sample selected, perform the following examination procedures: Review account opening documentation and ongoing due diligence information. Review account statements and, as necessary, specific transaction details. Compare expected transactions with actual activity. Determine whether actual activity is consistent with the nature of the customer’s business. Identify any unusual or suspicious activity. 9. On the basis of examination procedures completed, including transaction testing, form a conclusion about the adequacy of policies, procedures, and processes associated with private banking relationships. FFIEC BSA/AML Examination Manual 253 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
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Foreign Bank and Financial Accounts
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International Transportation of Cur
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Office of Foreign Assets Control
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Enterprise-Wide BSA/AML Compliance
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Corporate management. Enterprise-Wi
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Foreign Branches and Offices of U.S
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Examination Procedures Parallel Ban
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Correspondent Accounts (Domestic)
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Correspondent Accounts (Foreign)
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Correspondent Accounts (Foreign)
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U.S. Dollar Drafts — Overview U.S
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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
Page 205 and 206: Automated Clearing House Transactio
Page 207 and 208: 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
Page 239 and 240: Concentration Accounts — Overview
Page 241 and 242: Concentration Accounts — Examinat
Page 243 and 244: Lending Activities — Overview bus
Page 245 and 246: Trade Finance Activities — Overvi
Page 247 and 248: Risk Mitigation Trade Finance Activ
Page 249 and 250: Trade Finance Activities — Overvi
Page 251 and 252: Private Banking — Overview Privat
Page 253 and 254: Customer Risk Assessment Private Ba
Page 255: Private Banking — Overview determ
Page 259 and 260: Trust and Asset Management Services
Page 261 and 262: • The type of trust or agency acc
Page 263 and 264: Transaction Testing Trust and Asset
Page 265 and 266: Nonresident Aliens and Foreign Indi
Page 267 and 268: Nonresident Aliens and Foreign Indi
Page 269 and 270: Politically Exposed Persons — Ove
Page 271 and 272: Politically Exposed Persons — Ove
Page 273 and 274: Politically Exposed Persons — Exa
Page 275 and 276: Embassy and Foreign Consulate Accou
Page 277 and 278: Embassy and Foreign Consulate Accou
Page 279 and 280: Non-Bank Financial Institutions —
Page 287 and 288: Professional Service Providers —
Page 289 and 290: Professional Service Providers —
Page 291 and 292: Non-Governmental Organizations and
Page 293 and 294: Non-Governmental Organizations and
Page 295 and 296: Business Entities (Domestic and For
Page 297 and 298: Risk Factors Business Entities (Dom
Page 303 and 304: Cash-Intensive Businesses — Overv
Page 305 and 306: Appendix A: BSA Laws and Regulation
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Appendix A: BSA Laws and Regulation
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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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