BSA/AML Examiner School Case Study

Internal Use Only

• Unusual transaction by correspondent financial institutions — Suspicious transactions would include (1) wire transfer volumes that are extremely large in proportion to the asset size of the bank; (2) when the bank's business strategy and financial statements are inconsistent with a large volume of wire transfers, particularly outside the United States; (3) a large volume of wire transfers of similar amounts in and out on the same or next day. • International fund transfers not consistent with the customer's business —International transfers, to or from the accounts of domestic customers, in amounts or with a frequency that is inconsistent with the nature of the customer's known legitimate business activities. • International transfers funded by multiple monetary instruments — This involves the receipt of funds in the form of multiple official banks checks, traveler's checks, or personal checks that are drawn on or issued by U.S. financial institutions and made payable to the same individual or business, or related individuals or businesses, in U.S. dollar amounts that are below the Bank Secrecy Act reporting threshold. The funds are then wired to a financial institution outside the U.S. • Other unusual domestic or international fund transfers — The customer requests an outgoing wire or is the beneficiary of an incoming wire, and the instructions appear inconsistent with normal wire transfer practices. For example, the customer directs the Bank to wire the funds to a foreign country and advises the Bank to expect same-day return of funds from sources different than the beneficiary named, thereby changing the source of the funds. • No change in form of currency - Funds or proceeds of a cash deposit may be wired to another country without changing the form of currency. Note: You should contact the BSA Officer, immediately, to report any red flags you might notice. The BSA Officer will review and may consider filing a SAR. Red Flags in Foreign Correspondent Banking Note: AJ&R Bank & Trust doesn't have Foreign Correspondent banking at this time. • Wire transfers in large dollar amounts not consistent with due diligence report. • Unusually large numbers of wire transfers. • Transactions conducted in bursts of activity within a short period of time. • Unusual volume of the Bank's own bank check or dollar draft activity. • Unusually high numbers of returned or rejected items. • Frequent or numerous wire transfers originating from, or for the benefit, of shell banks or high-risk banks. • The deposit of U.S. postal money orders in a cash letter. • Large volumes of cashier's checks or bank drafts drawn against the correspondent account. Red Flags in Private Banking Accounts Here are the situations regulators believe to warrant further investigation in private banking accounts: • A request by a covered person to establish a relationship with, or route a transaction through, a financial institution that is unaccustomed to doing business with foreign persons and that has not sought out business of that type. • A request by a covered person to associate any form of secrecy with a transaction, such as booking the transaction in the name of another person or a business entity whose beneficial owner is not disclosed or readily apparent. • The routing of transactions involving a covered person into or through a secrecy jurisdiction or through jurisdictions or financial institutions that have inadequate customer identification practices

For Training Purposes Only

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