BSA/AML Examiner School - Case Study Oct 2023

LCB 12/15

Checklist 4.2: CIP Account Review (cont.)

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• A description of the methods and the results of any measures undertaken to verify the identity of the customer as non-documentary verification or as additional verification for certain signatories? Y • A description of the resolution of any substantive discrepancy discovered when verifying the identifying information obtained? 31 CFR 1020.220(a)(3) Y Comments: 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 issues noted below are a repeat from our 2014 review. • In one instance, the identification documents provided were not included in the file. In addition, the CIP form stated a driver's license and a credit card were received. The issue/expiration dates and a complete description of the documents were not noted. • 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. Recommendations • It is recommended that the Bank obtain this customer's identification documentation and add it to the customer record as soon as possible. • The issues noted above should be discussed with the Bank personnel involved to reinforce the Bank's requirements for deposit account opening and CIP Policy. In addition, staff should be reminded of the requirement for "Occupation" information and be instructed that this information must be specific, for example, "retired school teacher". 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. Seven of 28 (25%) of the CIP files reviewed did not have a completed customer risk assessment/due diligence form completed. Recommendation — It is recommended that individuals responsible for opening accounts receive additional training. Customers' debit/credit card numbers were not truncated when the cards were used as a source of secondary identification. It is considered an industry best practice to truncate customers' debit/credit card numbers to mitigate the risk of identity theft. Recommendation - It is recommended that customer's debit/credit card numbers be truncated on the OP forms or copies when a debit/credit card is used as a secondary form of identification. NA

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