BSA/AML Examiner School - Case Study Oct 2023

January 2016 The Audit Committee of the Board of Directors AJ & R Bank & Trust Scope of Independent Test

An independent test of AJ & R Bank & Trust (Bank) compliance with the Bank Secrecy Act/Anti Money Laundering and Financial Recordkeeping regulations was conducted as of January 4, 2016 for calendar year 2015. The review includes procedures to confirm the following: • Review and determine the adequacy of the Board-approved BSA/Anti-Money Laundering Policies and Customer Information Program; • Sample transactions to determine the integrity and accuracy of the systems for reporting large currency transactions; • Review the accuracy of tellers work and the completion of CTRs; • Review the accuracy and reasonableness of exempted customers; • Determine the integrity and accuracy of the institution's recordkeeping activities, including record retention requirements; • Sample wire transfers to determine the accuracy of forms and collection of required information; • Review the appropriateness of recordkeeping procedures for the sales of monetary instruments in cash between $3,000 and $10,000; • Sample new accounts (DDA, Savings, CD's, Loans, Trust) for CIP requirements; • Determine the appropriateness of monitoring procedures for suspicious activity; • Review "high risk" customers to determine possible suspicious activity, including Money Service Businesses (MSB's); • Review filed Suspicious Activity Reports (SARs) for required content; • Review the Bank's internal risk assessment of compliance with BSA requirements and analysis of high risk customers; • Determine if procedures are in place to provide compliance with the USA Patriot Act, including 314(a) and 314(b) requirements; • Determine if procedures are in place to provide for compliance with OFAC requirements; • Review the adequacy of the institution's training program. • Other miscellaneous areas. This review provides compliance with the annual testing requirement of the Bank Secrecy Act and other related regulations and is in compliance with the "FFIEC's Bank Secrecy Act/Anti Money Laundering Examination Manual" guidelines. The time period for various samples was/ September through November 2015. Findings of the review were discussed in detail with President/CEO, BSA Officer, and CFO on February 2, 2016.

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