BSA/AML Examiner School - Case Study Oct 2023

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

The Bank's BSA/AML Policy and account opening procedures require that customer due diligence and a risk assessment be completed for all new accounts. For seven of 28 (25%) CIP files reviewed, a completed customer risk assessment/due diligence form was not completed. Recommendation It is recommended that individuals responsible for opening accounts receive additional training to ensure consistent completion of the required form. Management Response As noted above in an earlier response, BSA Officer will conduct training with all personnel that The Board of Directors is ultimately responsible for ensuring that a bank maintains an effective BSA/AML internal control structure, including suspicious activity monitoring and reporting. Reporting is an essential component of ensuring that this internal control structure is maintained and accurate BSA/AML compliance decisions concerning the Bank are made by the Board. The Board currently receives BSA/AML reports from the BSA Officer on a monthly basis. Although the report has been enhanced to include the number of new accounts opened, CTRs and SARs filed, and 314 (a) report searches, it is still not comprehensive enough for the Board of Directors to be fully informed regarding the BSA Program. Recommendation It is recommended that the monthly report be revised to include information on reviews of compliance areas, exam or audit findings/exceptions and their resolution, training, comparison of current and prior year CTR and SAR filings, wire transfer activity, any recent changes in BSA/AMUOFAC/CIP regulatory requirements, responses to 314(a) and OFAC searches, and information concerning recent law enforcement and judicial requests for customer information. Management Response The Bank has a new Consolidated Tracking Report for all Examinations and Audits, This report will include all findings in this audit as well. Future reports to the Board of Directors will be enhanced to include training, comparisons to the prior year CTR and SAR filings, wire transfer activity, and recent law enforcement and judicial requests for customer information. BSA/AML Policy Approval Per the FFIEC's BSA Examination Handbook, "The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), each require the U.S. branches, agencies, and representative offices of the foreign banks they supervise operating in the United States to develop written BSA compliance programs that are approved by their respective bank's board of directors and noted in the minutes, or that are approved by delegatees acting under the express authority of their respective bank's board of open new accounts. Areas of Concern Board of Directors' Reporting and Documentation