2020 Journal of Community Bank Studies

2020 COMMUNITY BANK CASE STUDY COMPETITION

the (1) products and services, (2) customers and entities, and (3) geographic location in relation to the bank (Marco). C&N has a low risk in the second and third categories, but does provide many options as its products and services. Consequently, C&N can be identified as a “moderate risk” bank. There are three lines of defense that C&N uses in its BSA compliance program. The first line of defense is identifying risks through its software tools. They process alerts through C&N’s system, which brings up red flags. These alerts give banks like C&N insight to see whether officers may need to look into transactions further. With these assessment tools, C&N can also monitor wire transfers, automated clearing house payments, and other specific electronic bank processes. According to Bloomberg, ”criminals who are engaging in money laundering most likely have several accounts with different banks” (Weber). If someone raises suspicion, C&N can look into the situation using the 314(b) system. This system is voluntary for banks, but allows them to share information with any other bank that is also a registrant of 314(b). Collaborating with other banks is especially useful for fraud cases and allows institutions to track users to different transactions. The second line of defense is the use of BSA/ AML officers to oversee the alerts that come through the system. Most alerts that come through the system do not lead to suspicious activity, so it is up to the risk management personnel to filter through to see which transactions may need further investigation.

C&N offers a variety of different options for their customers, which, in turn, creates more risk.

possess more assets. C&N is a lower risk due to the geography it operates in and the nature of its customers but still conducts correct procedures to make sure it is compliant with BSA/AML regulations. Like most banks, C&N uses standardized risk assessment tools to develop a comprehensive BSA/AML compliance program tailored to the bank’s risk profile. Besides this process, C&N also gathers information about clients when opening an account to develop a customer risk profile. And because of the fifth pillar added to the BSA requirements, C&N must gather information on all persons in the company who own 25% or more of all legal entities that opened accounts after May 11, 2018. C&N offers a variety of different options for their customers, which, in turn, creates more risk. They offer amenities such as international/ national wire transfers, telephone transfers, and online banking. Risk can be identified in many ways, but in summary, it encompasses all of

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