Bank Secrecy Act/Anti-Money Laundering Examination Manual - ffiec

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Private Banking Due Diligence Program (Non-U.S. Persons) — Overview factors. More extensive due diligence, for example, may be appropriate for new clients; clients who operate in, or whose funds are transmitted from or through, jurisdictions with weak AML controls; and clients whose lines of business are primarily currency-based (e.g., casinos or currency exchangers). Due diligence should also be commensurate with the size of the account. Accounts with relatively more deposits and assets should be subject to greater due diligence. In addition, if the bank at any time learns of information that casts doubt on previous information, further due diligence would be appropriate. Ascertaining Source of Funds and Monitoring Account Activity Banks that provide private banking services generally obtain considerable information about their clients, including the purpose for which the customer establishes the private banking account. This information can establish a baseline for account activity that will enable a bank to better detect suspicious activity and to assess situations where additional verification regarding the source of funds may be necessary. Banks are not expected, in the ordinary course of business, to verify the source of every deposit placed into every private banking account. However, banks should monitor deposits and transactions as necessary to ensure that activity is consistent with information that the bank has received about the client’s source of funds and with the stated purpose and expected use of the account. Such monitoring will facilitate the identification of accounts that warrant additional scrutiny. Enhanced Scrutiny of Private Banking Accounts for Senior Foreign Political Figures For the purposes of private banking accounts under 31 CFR 103.175(r), the regulation defines the term “senior foreign political figure” to include one or more of the following: • A current or former: Senior official in the executive, legislative, administrative, military, or judicial branches of a foreign government (whether elected or not). Senior official of a major foreign political party. Senior executive of a foreign-government-owned commercial enterprise. 107 • A corporation, business, or other entity that has been formed by, or for the benefit of, any such individual. • An immediate family member (including spouses, parents, siblings, children, and a spouse’s parents and siblings) of any such individual. 107 For purposes of this definition, the terms “senior official” or “senior executive” mean an individual with substantial authority over policy, operations, or the use of government-owned resources. FFIEC BSA/AML Examination Manual 120 7/28/2006
Private Banking Due Diligence Program (Non-U.S. Persons) — Overview • A person who is widely and publicly known (or is actually known by the relevant bank) to be a close associate of such individual. Senior foreign political figures as defined above are often referred to as “politically exposed persons” or PEPs. Refer to the expanded overview section, “Politically Exposed Persons,” page 261, for additional guidance, in particular with respect to due diligence on accounts maintained for PEPs that do not meet the regulatory definition of “private banking account” set forth in 31 CFR 103.175(o). For private banking accounts for which a senior foreign political figure is a nominal or beneficial owner, the bank’s due diligence program must include enhanced scrutiny that is reasonably designed to detect and report transactions that may involve the proceeds of foreign corruption. The term “proceeds of foreign corruption” means any asset or property that is acquired by, through, or on behalf of a senior foreign political figure through misappropriation, theft, or embezzlement of public funds, the unlawful conversion of property of a foreign government, or through acts of bribery or extortion, and includes any other property into which any such assets have been transformed or converted. 108 Enhanced scrutiny of private banking accounts for senior foreign political figures should be risk-based. Reasonable steps to perform enhanced scrutiny may include consulting publicly available information regarding the home country of the client, contacting branches of the U.S. bank operating in the home country of the client to obtain additional information about the client and the political environment, and conducting greater scrutiny of the client’s employment history and sources of income. For example, funds transfers from a government account to the personal account of a government official with signature authority over the government account may raise a bank’s suspicions of possible political corruption. In addition, if a bank’s review of major news sources indicates that a client may be or is involved in political corruption, the bank should review the client’s account for unusual activity. Identifying Senior Foreign Political Figures Banks are required to establish policies, procedures, and controls that include reasonable steps to ascertain the status of an individual as a senior foreign political figure. Procedures should require obtaining information regarding employment and other sources of income, and the bank should seek information directly from the client regarding possible senior foreign political figure status. The bank should also check references, as appropriate, to determine whether the individual holds or has previously held a senior political position or may be a close associate of a senior foreign political 108 Additional red flags regarding transactions that may be related to the proceeds of foreign corruption are listed in “Guidance on Enhanced Scrutiny for Transactions That May Involve the Proceeds of Foreign Official Corruption,” issued by the U.S. Treasury, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Office of Thrift Supervision, and the Department of State, January 2001. FFIEC BSA/AML Examination Manual 121 7/28/2006
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Bank Secrecy Act / Anti-Money Laund
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Table of Contents Examination Proce
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INTRODUCTION Introduction This Fede
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Background Introduction In 1970, Co
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U.S. Treasury Introduction The BSA
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Introduction international narcotic
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Introduction Other legitimate sourc
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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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BSA/AML Risk Assessment — Overvie
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• High Intensity Financial Crime
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Examiner Development of a BSA/AML R
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BSA/AML Risk Assessment — Examina
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BSA/AML Compliance Program — Over
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Page 37 and 38:
Page 39 and 40:
BSA/AML Compliance Program — Exam
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BSA/AML Compliance Program — Exam
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Independent Testing BSA/AML Complia
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Developing Conclusions and Finalizi
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Developing Conclusions and Finalizi
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Customer Identification Program —
Page 51 and 52:
Customer Information Required Custo
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Page 55 and 56:
Page 57 and 58:
Transaction Testing Customer Identi
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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 67 and 68:
Page 69 and 70:
Law Enforcement Inquiries and Reque
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Page 73 and 74: Suspicious Activity Reporting — O
Page 75 and 76: Suspicious Activity Reporting — E
Page 81 and 82: CTR Backfiling Currency Transaction
Page 83 and 84: Currency Transaction Reporting —
Page 85 and 86: Annual Review Currency Transaction
Page 87 and 88: Currency Transaction Reporting Exem
Page 89 and 90: Currency Transaction Reporting Exem
Page 91 and 92: Information Sharing — Overview wi
Page 93 and 94: Information Sharing — Overview ap
Page 95 and 96: Examination Procedures Information
Page 97 and 98: Information Sharing — Examination
Page 99 and 100: Contemporaneous Purchases Purchase
Page 101 and 102: Purchase and Sale of Monetary Instr
Page 103 and 104: Responsibilities of Originator’s
Page 105 and 106: Funds Transfers Recordkeeping — O
Page 107 and 108: Funds Transfers Recordkeeping — O
Page 109 and 110: Foreign Correspondent Account Recor
Page 123: Private Banking Due Diligence Progr
Page 127 and 128: Private Banking Due Diligence Progr
Page 129 and 130: Private Banking Due Diligence Progr
Page 131 and 132: Special Measures — Overview minim
Page 133 and 134: Examination Procedures Special Meas
Page 135 and 136: Foreign Bank and Financial Accounts
Page 137 and 138: International Transportation of Cur
Page 139 and 140: Office of Foreign Assets Control
Page 151 and 152: Enterprise-Wide BSA/AML Compliance
Page 159 and 160: Foreign Branches and Offices of U.S
Page 165 and 166: Examination Procedures Parallel Ban
Page 167 and 168: Correspondent Accounts (Domestic)
Page 169 and 170: Correspondent Accounts (Domestic)
Page 171 and 172: large currency transactions. Corres
Page 173 and 174: 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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Funds Transfers — Overview Funds
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Funds Transfers — Overview • Di
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Risk Mitigation Funds Transfers —
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Funds Transfers — Examination Pro
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Automated Clearing House Transactio
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Page 205 and 206:
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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Privately Owned Automated Teller Ma
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Privately Owned ATMs — Examinatio
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Nondeposit Investment Products —
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Page 229 and 230:
Page 231 and 232:
Insurance — Overview Insurance
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• The identification of high-risk
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Insurance — Examination Procedure
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Concentration Accounts — Overview
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Lending Activities — Overview Len
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Examination Procedures Lending Acti
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Trade Finance Activities — Overvi
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Trade Finance Activities — Overvi
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Private Banking — Overview Privat
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Private Banking — Overview allow
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• The current source of funds for
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Examination Procedures Private Bank
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Trust and Asset Management Services
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Page 259 and 260:
Page 261 and 262:
Nonresident Aliens and Foreign Indi
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Page 265 and 266:
Politically Exposed Persons — Ove
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Risk Factors Politically Exposed Pe
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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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Page 281 and 282:
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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Page 297 and 298:
Cash-Intensive Businesses — Overv
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Appendix A: BSA Laws and Regulation
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Page 303 and 304:
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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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• Federal Register notices. • E
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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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Appendix G: Structuring Appendix G:
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Appendix H: Request Letter Items (C
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Page 329 and 330:
Purchase and Sale of Monetary Instr
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Page 341 and 342:
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Cash-Intensive Businesses Appendix
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Appendix J: Quantity of Risk Matrix
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Appendix J: Quantity of Risk Matrix
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Appendix L: SAR Quality Guidance Ap
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Appendix M: Quantity of Risk Matrix
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Appendix N: Private Banking — Com
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Appendix O: Examiner Tools for Tran
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Appendix P: BSA Record Retention Re
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• Name of purchaser. • Date of
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Appendix P: BSA Record Retention Re
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Acronym or abbreviation Full name A
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Acronym or abbreviation Full name I
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Acronym or abbreviation Full name R
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Bank Secrecy Act/Anti-Money Laundering Examination Manual - ffiec

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