BSA/AML Examiner School - Case Study Oct 2023

• The BSA Department should utilize a combination of monitoring processes and system reports (i.e., wire transfer reports, large cash transaction reports, Anti-money laundering software, etc.) daily, monthly and quarterly to identify the risk element of each customer and identify suspicious activity. • During account creation, the account officer should make reasonable efforts to inquire and identify what type of account or activity the customer will maintain at the Bank to identify a high risk customer or entity. Customer due diligence applies to all customers that are seeking to open an account with AJ&R Bank. Questions for All Customers (consumers or entities) 1. What is the purpose of the account? 2. Customer's (or beneficial owners') occupation or type of business must be documented. 3. What is your occupation? Are you currently employed? Place of employment? (Note: Be sure to obtain and record the occupation of each account holder.) If the customer is unemployed at the time of account opening, customer must provide their previous employer. 4. What type of items do you expect to be deposited to the account (i.e., cash, check, direct deposit, wires, ACH transactions, etc.)? How frequently will deposits be made? Estimate of anticipated account activity; especially cash activity and wires? 5. What methods do you plan to use to remove funds from the account (checks, ATM, debit card, automated bill payment, etc.)? 6. Will transactions affecting this account originate or have a destination outside the US? 7. What is the source of the funds/assets being deposited or used to open the account? 8. Why did you choose this bank? What other banks do you have accounts with? 9. If business, where is the business organized? Also obtain the county and state registration of business and date of resolution and registration; proof of legal status of the business; if the entity uses fictitious names, obtain documentation containing the customers' real names and other identifying information. Questions Specifically for Business Customers to identify High Risk 1. Is your business a foreign corporation or an offshore corporation located in tax or secrecy havens, or a domestic shell company, or an international business corporation? • If the answer is yes, the business is a high risk. 2. What is the type of business (cash—intensive business, car sales, import/export, transportation, jewelry dealer, etc.)? Please review the entire list of high risk business, attached to make a final determination. • If the business type matches an entity on the high risk list, the business is a high risk. • Is the business a cash-intensive business (i.e., convenience stores, restaurants, retail stores, liquor stores, etc.)? If the business type matches an entity on the high risk list, the business is a high risk. 3. Will your business be engaging in any of these activities? Check cashing, currency dealing or exchange, money orders, travelers, store value cards, money transfer services (i.e. Western Union). • if the business offers any of these services then the business is considered a Money Service Business (MSB) and should be classified as High Risk. Expanded Review Procedures for Enhanced Due Diligence (For Business Accounts (foreign and domestic), Cash-Intensive Businesses, and Non-Governmental Organizations and Charities) • Ensure the Bank has obtained all proper identification for all signers and /or owners;

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