BSA/AML Examiner School Case Study

Internal Use Only

Considering the frequent changes to the law and the BSA requirements, the BSA Compliance Officer will attend several external training sessions annually. In addition, other designated members of the BSA Department and Bank management will periodically attend educational programs related to the Bank Secrecy Act as well. The Board of Directors will be provided with annual training on the general BSA requirements. The BOD is required to understand the importance of BSA, AML and OFAC regulatory requirements, the ramifications of noncompliance, and the risks posed to the Bank. The BOD will be informed of changes and new developments in the BSA, its implementing regulations and directives, and the federal banking agencies' regulations. All Bank officers are responsible for acquainting themselves with the Bank's policies and procedures in this area and ensuring that their employees understand their responsibilities. Furthermore, management personnel are responsible for encouraging their employees to complete all BSA trainings under the direction of the BSA Compliance Officer. VIII. Anti-Money Laundering Policy and Procedures The Bank's policy is to ensure proper adherence to the provisions and intent of the USA Patriot Act. The Bank Secrecy Act (BSA) requires the Bank to have procedures in place to assist in detecting and preventing money laundering activities and other illegal activities conducted at the Bank. Money is "laundered" to conceal all types of criminal activity, including drug trafficking, which accounts for the majority of "dirty' money in the United States. Experts have estimated the amount of laundered drug money each year in billions. Money laundering is driven by criminal activities and the need to conceal the true source of funds. It becomes necessary only when the amount of cash is so large the criminal cannot absorb it into his or her lifestyle by spending it. Anti-money laundering procedures affect the following areas of the Bank: 1. Operations; 2. Lending; 3. Sale of Monetary Instruments; 4. Wire Transfers; and 5. One of the best methods for Bank staff to avoid being an unknowing accomplice to money launders is to properly identify new customers when their account is opened. Minimum identification requirements listed in the Customer Identification Program purchases assets such as vehicles or gold that can be easily resold domestically or overseas, the identity of the purchaser is easier to hide and the assets more difficult to locate and seize. Integration Provides an apparent legitimate explanation for the illicit funds. This could mean using the property described above as collateral for a loan that results in "clean" money being generated for the criminal. Some criminals use a foreign bank account and the participation of well-placed employees at both the US and foreign bank in the same loan schemes. Also, false import/export invoices can be effective ways to hide dirty money. Generally, this type of scheme involves the over estimation of entry documents to INTERNAL CONTROLS/REGULATORY REQUIREMENTS

For Training Purposes Only

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