BSA/AML Examiner School - Case Study Oct 2023

LCB 12/15

Internal Controls Checklist 10.2: Automated Clearing House Transactions

No

Yes

N/A

Based on a review of the policies, procedures, and processes related to ACH transactions, are the bank's policies, procedures, and processes adequate given the bank's ACH transactions and the risks they present? Arc the controls adequate to reasonably protect the bank from money laundering and terrorist financing? From review of management information systems (MIS) and internal risk rating factors, does the bank effectively identify and monitor high-risk customers using ACH transactions? Based on an analysis of the frequency and dollar volume and types of ACH transactions in relation to the bank's size, its location, and the nature of its customer account relationships, has the bank adequately assessed its risks related to ACH transactions? Is the bank's system for monitoring customers, including third-party service providers (TPSP), using ACH transactions for suspicious activities, and for reporting of suspicious activities, adequate given the bank's size, complexity, location, and types of customer relationships? Does the suspicious activity monitoring and reporting systems include: • Identifying customers with frequent and large ACH transactions. • Monitoring ACH detail activity when the batch-processed transactions are separated for other purposes (e.g., processing errors). . • Applying increased due diligence for international ACH transactions, including domestic transactions when the Originator is based in a foreign country or that are initiated by an international messaging system. • Identifying ACH transactions that the bank originates to foreign financial institutions, particularly to high-risk geographic locations. • Using methods to track, review, and investigate customer complaints regarding fraudulent or duplicate ACH transactions. • Does the bank have adequate policies, procedures, and internal controls to ensure that applicable foreign transactions coded as IAT contain all of the information required by the NACHA rule?

Y

Y

Y

Y

y

Y

Y

NA

Y

y

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