BSA/AML Examiner School Case Study

Internal Use Only

AJ&R BANK & TRUST Bank Secrecy Act, Anti-Money Laundering and OFAC Compliance Program May 20, 2015

Table of Contents

POLICY DESCRIPTION, AUTHORITY AND SCOPE........................................................................... 6 I. Penalties ........................................................................................................................................... 6 II. BSA/AML/OFAC COMPLIANCE PROGRAM......................................................................... 6 III. BSA Risk Assessment .................................................................................................................. 6 IV. System of Internal Controls.......................................................................................................... 7 V. Independent Audits ...................................................................................................................... 7 VI. Designation of BSA Officer ......................................................................................................... 7 VII. Training of all Staff Personnel ..................................................................................................... 7 INTERNAL CONTROLS/REGULATORY REQUIREMENTS .............................................................. 8 VIII. Anti-Money Laundering Policy and Procedures ...................................................................... 8 Integration ........................................................................................................................................... 8 Procedures for Complying with Anti-Money Laundering.................................................................. 9 High Risk Customers ........................................................................................................................ 10 IX. Detecting Suspicious Activity – “RED FLAGS”....................................................................... 11 Structure Transactions ...................................................................................................................... 11 General "Red Flags" for Suspicious Activity ................................................................................... 12 Red Flags for Customer Service/New Account Representatives/Safe Deposit Staff ....................... 12 Red Flags for Wire Transfers Used in Money Laundering............................................................... 13 Red Flags in Foreign Correspondent Banking.................................................................................. 14 Red Flags in Private Banking Accounts ........................................................................................... 14 Red Flags for Lenders ....................................................................................................................... 15 X. Customer Identification Program Policy and Procedures .......................................................... 16 Definitions......................................................................................................................................... 16 Verifying Account Opening Documentation .................................................................................... 18 Loan Customers and CIF .................................................................................................................. 18 Foreign Customers and CIP .............................................................................................................. 19 Lack of Verification .......................................................................................................................... 19

For Training Purposes Only

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