BSA/AML Examiner School - Case Study Oct 2023

AJ & R Bank & Trust BANK SECRECY ACT/ANTI-MONEY LAUNDERING INDEPENDENT TEST REPORT DECEMBER 2015

EXECUTIVE SUMMARY AJ & R Bank & Trust compliance with BSA is upgraded to satisfactory; however, the Program still requires close attention. The Bank is a community bank with total assets of $32,218,000 as of December 31, 2015. The Bank has one office in Todds County, Tennessee. Todds County, TN is not located in a High Intensity Drug Trafficking Area (HIDTA) or a High Intensity Financial Crimes Area (HIFCA). Its customer base is primarily consumer and small business. Services are mainly confined to loan and deposit products, and the Bank does not conduct business for non customers. T h e j o i n t Re p o r t o f E x am i n a t i o n a s o f Ma r c h 3 1 , 2 0 1 5 i n d i c a t e d t h a t b o t h t h e Ba n k ' s BSA P r o g r am a n d c omp l i a n c e w i t h r e l a t e d l aws a n d r e g u l a t i o n s h a d i mp r o v e d s i n c e t h e p r i o r e x am i n a t i o n a n d wa s c o n s i d e r e d s a t i s f a c t o r y . Ac c o r d i n g t o t h e Re p o r t , c o n t i n u e d e n h a n c eme n t s we r e n e e d e d . The findings of this Independent Test also indicate improvement in the BSA program. However, BSC continues to be concerned with several areas including the timely completion of required tasks, the need for additional enhancements to procedures, and training for new employees and the BSA Assistant. In addition, although the Board is receiving more information than noted during BSC's 2014 BSA Independent Test, they are still not receiving a comprehensive overview of the Program. Apparent violations of law were noted within the Customer Information Program (CIP), Currency Transaction Reports, and Information Sharing 314(a) samples. These are considered repeat violations as these areas also contained errors of a similar nature at BBC's 2014 Independent Test. In addition, several areas where additional attention appears warranted were noted. Specifics of BBC's findings are detailed below. The BSA Checklist section of this report includes additional information and recommendations regarding the Bank's BSA Program. According to 31 CFR 1010.520(b)(2)(i), the institution is to "expeditiously" (or within the time period required in the request) search the required records to determine whether it maintains or has maintained any account for, or has engaged in any transaction with, each individual, entity, or organization named in FinCEN's request. During the review of the 314(a) sample, 11 of 12 (91%) search requests in the sample were either not completed or were completed late. BSA Officer and BSA Assistant are the listed contacts to receive 314(a) requests. Through discussion with BSA Officer, it was determined that the BSA officer was required to perform teller duties in addition to the BSA responsibilities, and the back up individual was out on medical leave. It does not appear that.the BSA Assistant has been trained on how to access the requests or the timing requirements of the searches, although she is designated as a contact and is receiving the email notification of the search requests. In addition, the Bank does not appear to have written procedures for this process. Apparent Violations of Law Information Sharing 314(a)

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