BSA/AML Examiner School Case Study

Internal Use Only

should inquire about the source of funds and alert your supervisor and the BSA officer that the account should receive more intense monitoring until the normal pattern can be ascertained. • A customer who refuses to provide identification or other information needed for a new account. Do not open the account and notify your supervisor or the BSA officer. • Retail banking customers who inquire about foreign transactions, including wire transfers. This is not a suspicious activity by itself, but you should alert your supervisor and the BSA officer that the account should receive more intense monitoring until the normal pattern can be ascertained. • A customer who requests a safe deposit box but has no other relationship at the Bank. It is unusual for customers to have a safe deposit box at a financial institution unless they have other account relationships. — AJ&R Bank does not open customer storage boxes for non-account holders. • A customer visits his or her safe deposit box on an unusually frequent basis. • The pattern of traffic to a safe deposit box changes. For example, several people enter a box together when only one person has used the box in past. • Large amounts of cash are maintained in a safe deposit box. You may notice this as a customer cashes a large check at the teller window and then goes directly to his or her safe deposit box. • A customer rents multiple safe deposit boxes. This may indicate that the customer needs more boxes to store large amounts of currency. Red Flags for Wire Transfers Used in Money Laundering The following is a list of various transactions and activities provided by regulators that may indicate potential money laundering. While not all inclusive, the list does reflect ways that launderers have been known to operate. Transactions or activities listed may not necessarily be indicative of money laundering if they are consistent with a customer's legitimate business. Also, many of the "red flags" involve more than one type of transaction and may be identified by staff in other areas such as retail or commercial banking. • Incoming or outgoing wire transfers with instructions to pay upon proper identification — The instructions to the receiving bank are to "pay upon proper identification." If paid for in cash, the amount may be just under $10,000 so no CTR is required. The purchase may be made with numerous official checks or other monetary instruments. The amount of the transfer may be large, or the funds may be sent to a foreign country. • Outgoing wire transfers requested by non-account holders — If paid in cash, the amount may be just under $10,000 to avoid a CTR. Alternatively; the transfer may be paid with several official checks or other monetary instruments. The funds may be directed to a foreign country. AJ&R Bank does not send or receive wire transfers for non-account holders. • Frequent wire transfers with no apparent business reason — A customer's frequent wire transfer activity is not justified by the nature of the customer's business. • High volume of wire transfers with low account balances — The customer requests a high volume of incoming and outgoing wire transfers but maintains low or overdrawn account balances. • Incoming and outgoing wires in similar dollar amounts — There is a pattern of wire transfers of similar amounts both in and out of the customer's account, or related customers on the same day or next day. The customer may receive many small incoming wires, and then order a large outgoing wire transfer to another city or country. • Large wires by customers operating a cash business — This could involve wire transfers by customers operating a mainly cash business. The customers may be depositing large amounts of currency. • Cash or bearer instruments used to fund wire transfers — Use of cash or bearer instruments to fund wire transfers may indicate money laundering.

For Training Purposes Only

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