BSA/AML Examiner School - Case Study Oct 2023

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

Recommendation It is recommended that written procedures be created and that those responsible for 314(a) be trained on the procedures. In addition, designated contacts should be trained on the search requirements and use of the "Secure Information Sharing System" (SISS); BSA Assistant Howard should receive such training as soon as possible. Consider should be given to assigning and training an additional employee as a 314(a) contact to ensure that searches are completed within The Bank has hired an Operations Officer to assist with various operational issues. BSA Officer will not spend as much time on the teller line in the future. In addition, our tellers will be trained to open all types of deposit accounts. At this time, BSA Officer is the only employee that can open money market, CD, and IRA deposit accounts. Having additional staff to support the new accounts function will ensure that these search requirements are performed timely. As an additional step, BSA Officer will train CO to perform these searches in her absence. Customer Information Program (CIP) According to 31 CFR 1020.220(a)(3), a financial institution must retain all identifying information collected about a customer and a description of any document that was relied on for documentary verification. The types of issues noted below were also cited during the 2014 review: • In one instance, the identification documents provided were not included in the file. The CIP form includes a statement that a driver's license and credit card were received. The issue/expiration dates and a complete description of the documents were not noted on the form. • In three instances, the copies of the verification documents could not be read. • In 14 of the 28 (50%) accounts reviewed, Bank staff either did not document the customer's occupation or line of business. The Bank's account opening procedures lists "Occupation" as a required account-opening element. Recommendation A. It is recommended that the Bank obtain this customer's identification documentation and add it to the customer record as soon as possible. Account opening staff should be reminded that c2pies of CIP documentation should be legible. In addition, the issues noted above should be discussed withFeinTri personnel involved to reinforce the Bank's requirements for deposit account opening and its' CIP Policy. Finally, applicable staff should be reminded of the requirement for "Occupation" information, and instructed that this information must be specific, for example, "retired school teacher." Management Response The Bank will pursue the missing documents noted above with BSA Officer working with the personnel that opened the account. The issue of items not being legible has been addressed. The Bank is leasing a color copy machine that prints, copies, and scans information. The prior machine as black and white was very old, and driver's licenses & passports were not legible. the required timeframes. Management Response

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