BSA/AML Examiner School - Case Study Oct 2023

Examination Conclusions and Comments (Continued) Bank Secrecy Act (BSA)

The BSA program and compliance with related laws and regulations has improved and is now satisfactory. The Board approved the Bank Secrecy Act /Anti-Money Laundering / Office of Foreign Asset Control Policy on January 22, 2015. The policy is considered adequate and comprehensive of all BSA-related areas. The Board reappointed Amanda Smith as BSA Officer during the May meeting. The Customer Identification Program (CIP) policies are included in the policy, and the procedures are considered satisfactory. Better Bank Corporation (BBC) conducted the most recent independent audit as of September 2014. BBC identified multiple significant recommendations and identified non-compliance with several BSA related laws. As a result, BBC rated the program as needs improvement, and an interim audit occurred in April 2015. Examiners reviewed the draft report during the examination, which concluded the majority of the deficiencies had been addressed. The interim audit did raise concerns in the cohesiveness of the BSA program, the BSA Officer, and the documentation of training. Training now occurs regularly and is now considered appropriate. Adherence with CIP and OFAC requirements are also found to be appropriate. While overall improvement is evident, an isolated apparent violation of Chapter X of the Treasury Department’s Financial Crimes Enforcement Network is cited for failure to file a CTR within the required timeframe. Currency Transaction Reports Management failed to file a CTR within the appropriate time frame. Management monitors transactions daily through a daily cash report, which aggregates transactions greater than $3,000, in order to identify if a CTR should be filed. While management generally identifies transactions, an isolated incident was identified by examiners during the examination in which a CTR was filed in excess of the 15-day time frame. An apparent violation of Section 1010.306(a)(1) of 31 C.F.R. Chapter X is cited. This is a repeat violation from the prior examination. Management should develop processes to ensure CTRs are identified and filed appropriately going forward. Refer to the Violations of Laws and Regulations page of this report for further information. BSA Officer Smith stated that CTRs will be filed within the required time frame going forward. Suspicious Activity Reports (SARs) While SARs generally contain the necessary information to detail the suspicious activity, management should strengthen the narratives included in the SARs. In particular, the narratives should include more detail regarding the individual involved in the transaction, such as occupation, length and type of relationship to the institution, and why the transaction is suspicious. BSA Officer Smith stated that SAR narratives would be enhanced going forward, to include the recommendations. Office of Foreign Asset Control Effective policies and procedures are in place to ensure satisfactory compliance with OFAC regulations.

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