BSA/AML Examiner School - Case Study Oct 2023

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

Additional training will be provided to the staff by BSA Officer, which includes documenting the customer's occupation or line of business. This will include the requirements being specific as noted in the recommendation above.

Currency Transactions Reports (CTRs) 31 CFR 1010.311(b)(1) requires financial institutions to file properly completed CTRs. Additional filing instructions and information are included in FinCEN CTR Electronic Filing Requirements Attachment C —Electronic Filing Instructions and FinCEN CTR FAQs. Apparent technical violations were noted for ... 2%.2KLat j245yaLCTRs reviewed for the sample period. Both CTRs contained errors in the completion of form details; refer to the CTR Worksheet for specifics. Recommendation It is recommended that FinCEN be contacted to determine if the CTRs with errors should be re- filed. In addition, these errors should be reviewed with staff to ensure compliance going forward. Management Response BSA Officer will follow up with FinCEN to determine if refiling for these errors is necessary. As noted in the recommendation, this will be included in the training with the staff for properly completing CSRs. Contraventions of Bank Policy OFAC The Bank currently uses ChexSystems to verify customer data at account opening and according to the request list responses, OFAC verifications are completed through ChexSystems. However, during review of the ChexSystems "Consumer Information" report, BSC determined that ChexSystems is not performing an OFAC search. CFO Enix contacted ChexSystems during the independent test and was informed that the OFAC service is an "add-on" product. ChexSystems confirmed that OFAC verifications are not part of the Bank's current contract. It is noted that the Bank has requested information about the OFAC service. Recommendation It is recommended that Bank employees who open accounts be instructed to perform an individual OFAC search at account opening until the ChexSystems issue is resolved. In addition, this vendor should be reviewed on an annual basis to ensure that contracted services are in accordance to the Bank's policies, and are being performed as agreed. Management Response This was resolved during the exit interview for BSA. The Bank is using a website that performs the OFAC check. The information from the website is included with the new account documents. Customer Due Diligence/Risk Assessment

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