BSA/AML Examiner School Case Study

Internal Use Only

• Politically Exposed Persons • Embassy and Foreign Consulate Accounts • Professional Service Provider Accounts • Nonresident aliens and foreign individuals • Non-Bank Financial Institutions (MSBs) • Non-Governmental Organization and Charity Accounts • Business Entities (domestic and foreign)

• Cash Intensive Businesses • Private Banking Customers Customer due diligence (CDD) consists of routine questions which broadly predicts account activity, but specifically identify persons and entities subject to enhanced due diligence. Customer Identification program (CIP) describes routine requirements for specific information that identifies the person or entity. Verification by documentary or non-documentary methods is required by law. Customer Due Diligence for all Customers In general, the Bank's Customer Due Diligence Program enables Bank personnel to predict with relative certainty the types of transactions in which a customer is likely to engage, and in turn assists the Bank in determining when transactions are potentially suspicious. The concept of customer due diligence begins with verifying the customer's identity and assessing the risks associated with that customer, including enhanced customer due diligence for high risk customers and ongoing due diligence of the customer base. In addition, these measures help the Bank to: 1. Comply with regulatory requirements; 2. Detect and reporting unusual or suspicious activity or transactions that potentially expose the Bank to financial loss, increased expenses or reputation risk; 3. Avoid criminal exposure from persons who use or attempt to use the Bank's products and services for illicit purposes; and 4. Adhere to safe and sound banking practices. Customer Due Diligence Program Checklist: The program is considered commensurate with the Bank's overall BSA/AML risk profile, paying particular attention to high risk customers; Program provides a clear statement from the Board of Directors and Senior Management regarding the overall expectations of the program and establishes specific staff responsibilities, including personnel responsible for reviewing or approving changes to a customer's risk rating or profile, as applicable; Program ensures the Bank has implemented an effective suspicious activity monitoring system; Program provides guidance for documenting analysis associated with the due diligence process, including guidance for resolving issues when insufficient or inaccurate information is obtained; and ID Program ensures the Bank maintains current customer information.

For Training Purposes Only

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