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

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Appendix F: Money Laundering and Terrorist Financing “Red Flags” • Funds transfers do not include information on the originator, or the person on whose behalf the transaction is conducted, when the inclusion of such information would be expected. • Multiple personal and business accounts or the accounts of nonprofit organizations or charities are used to collect and funnel funds to a small number of foreign beneficiaries. • Foreign exchange transactions are performed on behalf of a customer by a third party, followed by funds transfers to locations having no apparent business connection with the customer or to high-risk countries. Other Transactions That Appear Unusual or Suspicious • Transactions involving foreign currency exchanges are followed within a short time by funds transfers to high-risk locations. • Multiple accounts are used to collect and funnel funds to a small number of foreign beneficiaries, both persons and businesses, particularly in high-risk locations. • A customer obtains a credit instrument or engages in commercial financial transactions involving the movement of funds to or from high-risk locations when there appear to be no logical business reasons for dealing with those locations. • Banks from high-risk locations open accounts. • Funds are sent or received via international transfers from or to high-risk locations. • Insurance policy loans or policy surrender values that are subject to a substantial surrender charge. FFIEC BSA/AML Examination Manual F–9 7/28/2006
Appendix G: Structuring Appendix G: Structuring Structuring transactions to evade BSA reporting and certain recordkeeping requirements can result in civil and criminal penalties under the BSA. Under the BSA (31 USC 5324), no person shall, for the purpose of evading the Currency Transaction Report (CTR) or a geographic targeting order reporting requirement, or certain BSA recordkeeping requirements: • Cause or attempt to cause a bank to fail to file a CTR or a report required under a geographic targeting order or to maintain a record required under BSA regulations. • Cause or attempt to cause a bank to file a CTR or report required under a geographic targeting order, or to maintain a BSA record that contain a material omission or misstatement of fact. • Structure, as defined above, or attempt to structure or assist in structuring, any transaction with one or more banks. The definition of structuring, as set forth in 31 CFR 103.11(gg) (which was implemented before a Patriot Act provision extended the prohibition on structuring to geographic targeting orders and BSA recordkeeping requirements) states, “a person structures a transaction if that person, acting alone, or in conjunction with, or on behalf of, other persons, conducts or attempts to conduct one or more transactions in currency in any amount, at one or more financial institutions, on one or more days, in any manner, for the purpose of evading the [CTR filing requirements].” “In any manner” includes, but is not limited to, breaking down a single currency sum exceeding $10,000 into smaller amounts that may be conducted as a series of transactions at or less than $10,000. The transactions need not exceed the $10,000 CTR filing threshold at any one bank on any single day in order to constitute structuring. Money launderers and criminals have developed many ways to structure large amounts of currency to evade the CTR filing requirements. Unless currency is smuggled out of the United States or commingled with the deposits of an otherwise legitimate business, any money laundering scheme that begins with a need to convert the currency proceeds of criminal activity into more legitimate-looking forms of financial instruments, accounts, or investments, will likely involve some form of structuring. Structuring remains one of the most commonly reported suspected crimes on Suspicious Activity Reports (SARs). Bank employees should be aware of and alert to structuring schemes. For example, a customer may structure currency deposit or withdrawal transactions, so that each is less than the $10,000 CTR filing threshold; use currency to purchase official bank checks, money orders, or traveler’s checks with currency in amounts less than $10,000 (and possibly in amounts less than the $3,000 recordkeeping threshold for the currency purchase of monetary instruments to avoid having to produce identification in the process); or exchange small bank notes for large ones in amounts less than $10,000. FFIEC BSA/AML Examination Manual G–1 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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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 —
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Customer Information Required Custo
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Page 57 and 58:
Transaction Testing Customer Identi
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Page 61 and 62:
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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Suspicious Activity Reporting — E
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CTR Backfiling Currency Transaction
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Currency Transaction Reporting —
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Annual Review Currency Transaction
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Currency Transaction Reporting Exem
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Currency Transaction Reporting Exem
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Information Sharing — Overview wi
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Information Sharing — Overview ap
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Examination Procedures Information
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Information Sharing — Examination
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Contemporaneous Purchases Purchase
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Purchase and Sale of Monetary Instr
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Responsibilities of Originator’s
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Funds Transfers Recordkeeping — O
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Funds Transfers Recordkeeping — O
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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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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 (Domestic)
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large currency transactions. Corres
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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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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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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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Privately Owned Automated Teller Ma
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Privately Owned ATMs — Examinatio
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Nondeposit Investment Products —
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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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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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Risk Factors Politically Exposed Pe
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Politically Exposed Persons — Exa
Page 271 and 272: Embassy and Foreign Consulate Accou
Page 273 and 274: Embassy and Foreign Consulate Accou
Page 275 and 276: Non-Bank Financial Institutions —
Page 281 and 282: Professional Service Providers —
Page 283 and 284: Professional Service Providers —
Page 285 and 286: Non-Governmental Organizations and
Page 287 and 288: Non-Governmental Organizations and
Page 289 and 290: Business Entities (Domestic and For
Page 297 and 298: Cash-Intensive Businesses — Overv
Page 299 and 300: Appendix A: BSA Laws and Regulation
Page 305 and 306: Appendix B: BSA/AML Directives Appe
Page 307 and 308: Web Sites Appendix C: BSA/AML Refer
Page 309 and 310: • Federal Register notices. • E
Page 311 and 312: Appendix D: Statutory Definition of
Page 313 and 314: Appendix E: International Organizat
Page 315 and 316: Appendix F: Money Laundering and Te
Page 321: Appendix F: Money Laundering and Te
Page 325 and 326: Appendix H: Request Letter Items (C
Page 329 and 330: Purchase and Sale of Monetary Instr
Page 335 and 336: Automated Clearing House Transactio
Page 341 and 342: Nonresident Aliens and Foreign Indi
Page 343 and 344: Cash-Intensive Businesses Appendix
Page 345 and 346: Appendix J: Quantity of Risk Matrix
Page 347 and 348: Appendix J: Quantity of Risk Matrix
Page 349 and 350: Appendix L: SAR Quality Guidance Ap
Page 351 and 352: Appendix M: Quantity of Risk Matrix
Page 353 and 354: Appendix N: Private Banking — Com
Page 355 and 356: Appendix O: Examiner Tools for Tran
Page 357 and 358: Appendix P: BSA Record Retention Re
Page 359 and 360: • Name of purchaser. • Date of
Page 361 and 362: Appendix P: BSA Record Retention Re
Page 363 and 364: Acronym or abbreviation Full name A
Page 365 and 366: Acronym or abbreviation Full name I
Page 367: Acronym or abbreviation Full name R
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Bank Secrecy Act/Anti-Money Laundering Examination Manual - ffiec

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