BSA/AML Examination Manual - ffiec

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• The types of accounts offered by the bank. • The bank’s methods of opening accounts. • The types of identifying information available. Customer Identification Program — Overview • The bank’s size, location, and customer base, including types of products and services used by customers in different geographic locations. Pursuant to the CIP rule, an “account” is a formal banking relationship to provide or engage in services, dealings, or other financial transactions, and includes a deposit account, a transaction or asset account, a credit account, or another extension of credit. An account also includes a relationship established to provide a safe deposit box or other safekeeping services or to provide cash management, custodian, or trust services. An account does not include: • Products or services for which a formal banking relationship is not established with a person, such as check cashing, funds transfer, or the sale of a check or money order. • Any account that the bank acquires. This may include single or multiple accounts as a result of a purchase of assets, acquisition, merger, or assumption of liabilities. • Accounts opened to participate in an employee benefit plan established under the Employee Retirement Income Security Act of 1974. The CIP rule applies to a “customer.” A customer is a “person” (an individual, a corporation, partnership, a trust, an estate, or any other entity recognized as a legal person) who opens a new account, an individual who opens a new account for another individual who lacks legal capacity, and an individual who opens a new account for an entity that is not a legal person (e.g., a civic club). A customer does not include a person who does not receive banking services, such as a person whose loan application is denied. 43 The definition of “customer” also does not include an existing customer as long as the bank has a reasonable belief that it knows the customer’s true identity. 44 Excluded from the definition of customer are federally regulated banks, banks regulated by a state bank regulator, governmental entities, and publicly traded companies (as described in 31 CFR 103.22(d)(2)(ii) through (iv)). 43 When the account is a loan, the account is considered to be “opened” when the bank enters into an enforceable agreement to provide a loan to the customer. 44 The bank may demonstrate that it knows an existing customer’s true identity by showing that before the issuance of the final CIP rule, it had comparable procedures in place to verify the identity of persons who had accounts with the bank as of October 1, 2003, though the bank may not have gathered the very same information about such persons as required by the final CIP rule. Alternative means include showing that the bank has had an active and longstanding relationship with a particular person, as evidenced by such things as a history of account statements sent to the person, information sent to the Internal Revenue Service (IRS) about the person’s accounts without issue, loans made and repaid, or other services performed for the person over a period of time. However, the comparable procedures used to verify the identity detailed above might not suffice for persons that the bank has deemed to be high risk. FFIEC BSA/AML Examination Manual 46 8/24/2007
Customer Information Required Customer Identification Program — Overview The CIP must contain account-opening procedures detailing the identifying information that must be obtained from each customer. 45 At a minimum, the bank must obtain the following identifying information from each customer before opening the account: 46 • Name. • Date of birth, for individuals. • Address. 47 • Identification number. 48 Based on its risk assessment, a bank may require identifying information in addition to the items above for certain customers or product lines. Customer Verification The CIP must contain risk-based procedures for verifying the identity of the customer within a reasonable period of time after the account is opened. The verification procedures must use “the information obtained in accordance with [31 CFR 103.121] paragraph (b)(2)(i),” namely the identifying information obtained by the bank. A bank need not establish the accuracy of every element of identifying information obtained, but it must verify enough information to form a reasonable belief that it knows the true identity of the customer. The bank’s procedures must describe when it will use documents, nondocumentary methods, or a combination of both. 45 When an individual opens a new account for an entity that is not a legal person or for another individual who lacks legal capacity, the identifying information for the individual opening the account must be obtained. By contrast, when an account is opened by an agent on behalf of another person, the bank must obtain the identifying information of the person on whose behalf the account is being opened. 46 For credit card customers, the bank may obtain identifying information from a third-party source before extending credit. 47 For an individual: a residential or business street address, or if the individual does not have such an address, an Army Post Office (APO) or Fleet Post Office (FPO) box number, the residential or business street address of next of kin or of another contact individual, or a description of the customer’s physical location. For a “person” other than an individual (such as a corporation, partnership, or trust): a principal place of business, local office, or other physical location. 48 An identification number for a U.S. person is a taxpayer identification number (TIN) (or evidence of an application for one), and an identification number for a non-U.S. person is one or more of the following: a TIN; a passport number and country of issuance; an alien identification card number; or a number and country of issuance of any other unexpired government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard. TIN is defined by section 6109 of the Internal Revenue Code of 1986 (26 USC 6109) and the IRS regulations implementing that section (e.g., Social Security number (SSN), individual taxpayer identification number (ITIN), or employer identification number). FFIEC BSA/AML Examination Manual 47 8/24/2007
Page 1 and 2: Bank Secrecy Act / Anti-Money Laund
Page 3 and 4: Table of Contents EXPANDED EXAMINAT
Page 5 and 6: INTRODUCTION Introduction This Fede
Page 7 and 8: Background Introduction In 1970, Co
Page 9 and 10: Introduction institutions, such as
Page 11 and 12: Introduction proliferation of weapo
Page 13 and 14: Introduction Although the motivatio
Page 15 and 16: Scoping and Planning — Overview C
Page 17 and 18: Scoping and Planning — Overview T
Page 19 and 20: Scoping and Planning — Examinatio
Page 21 and 22: Scoping and Planning — Examinatio
Page 23 and 24: BSA/AML Risk Assessment — Overvie
Page 27 and 28: Analysis of Specific Risk Categorie
Page 31 and 32: BSA/AML Risk Assessment — Examina
Page 33 and 34: BSA/AML Compliance Program — Over
Page 39 and 40: BSA/AML Compliance Program — Exam
Page 45 and 46: Developing Conclusions and Finalizi
Page 47 and 48: Developing Conclusions and Finalizi
Page 49: Customer Identification Program —
Page 53 and 54: Customer Identification Program —
Page 57 and 58: Transaction Testing Customer Identi
Page 61 and 62: Customer Due Diligence — Overview
Page 63 and 64: Customer Due Diligence — Examinat
Page 65 and 66: Suspicious Activity Reporting — O
Page 69 and 70: Law Enforcement Inquiries and Reque
Page 71 and 72: Timing of a SAR Filing Suspicious A
Page 77 and 78: Suspicious Activity Reporting — E
Page 79 and 80: 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
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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
Page 135 and 136:
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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Page 167 and 168:
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
Page 185 and 186:
Payable Through Accounts — Examin
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Payable Through Accounts — Examin
Page 189 and 190:
Risk Mitigation Pouch Activities
Page 191 and 192:
Pouch Activities — Examination Pr
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Electronic Banking — Overview lin
Page 195 and 196:
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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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
Page 389 and 390:
Export Administration Act of 1979,
Page 391 and 392:
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
Page 405:
U United Nations, 7, 137 Updating O
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