BSA/AML Examiner School - Case Study Oct 2023

AJ&R BANK & TRUST Bank Secrecy Act/Anti-Money Laundering and Office of Foreign Assets Control Compliance Risk Assessment Updated January 31, 2015

This BSA/AML/OFAC compliance risk assessment is conducted for the purpose of evaluating the bank's exposure to being used to further illegal activity and terrorist financing. It reflects the bank's position as of January 31, 2015. It will be updated annually or more frequently if circumstances dictate and reported to the Board of Directors. I. Bank Size AJ&R Bank & Trust is in Peer Group 15, which includes all commercial banks with assets of $50 million and less and a non-SMSA as of January 31, 2015. The bank's assets were $31MM with the one office in Todd’s County. The bank has 12 full-time equivalent employees, with 1 part-time. The individual responsible for BSA/AML compliance is Julie Collins, and assistant Amy Grant, who is also responsible for OFAC compliance. Mr. William England, SVP; pulls the 314A report and the tellers review the individual names for possible matches. Training for BSA is provided thru Digital University, In-House Training and Seminars. Data processing services are provided by Fidelity Information Services, FIS. The system's standard reports are used to monitor customer activity. The bank makes use of FIS's service that runs OFAC comparisons on new accounts daily and all accounts quarterly. Additionally, ChexSystems and CBC Innovis data bases are utilized for OFAC checks on new checking and loan customers respectively. OFAC comparisons on wire transfers and non customer check cashing are done through the Bankers Bank through DataLine. II. Geography The bank's assessment area for Community Reinvestment Act purposes includes all Todd’s County, Tennessee. Todd’s County is a rural area and is not designated as a High Intensity Drug Trafficking Area (HIDTA) or as a High Intensity Financial Crimes Area (HIFCA). III. Customer Base The customer base is primarily consumer and small business. The bank has had an average of 31 new account openings for the past 12 months. We have not yet had any non-US persons in the bank's customer base. The bank has only a few accounts that are classified as non-bank financial institutions or money services businesses. The customer base was reviewed, and no accounts were deemed high risk at this time. IV. Products and Services The bank's products and services are conventional in nature. All account relationships are established in person. In general, the bank's product lines include: • Electronic banking: ATM, Debit cards, ACH debits & credits, Online Banking & Bill Pay • Funds transfers: Established customers • Sale of monetary instruments: Established customers • Conventional deposit services: Checking, Savings, Time certificates of deposit, & Individual Retirement Accounts. • Conventional lending services: Consumer, Commercial, & Real estate.

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