BSA/AML Examiner School Case Study

Internal Use Only

Questions Specifically for Consumers to Identify High Risk 1. National origin - In what country are you a citizen? • If the person is a nonresident alien or foreign, it's a high risk. Refer to Enhanced Due Diligence Procedures. 2. Connections to foreign jurisdictions — Are you or any of your relatives or associates connected to the government of a country other than the US? (politically exposed person) • If the person or is related to a politically exposed person, it's a high risk. Refer to Enhanced Due Diligence Procedures. 3. Will the customer's account be under private banking service?. • Private banking relationships will be classified as high risk. Refer to enhanced due diligence procedures. Questions Specifically for Business Customers to identify High Risk 1. Is your business a foreign corporation or an offshore corporation located in tax or secrecy havens, or a domestic shell company, or an international business corporation? • If the answer is yes, the business is a high risk. 2. What is the type of business (cash—intensive business, car sales, import/export, transportation, jewelry dealer, etc.)? Please review the entire list of high risk business, attached to make a final determination. • If the business type matches an entity on the high risk list, the business is a high risk. • Is the business a cash-intensive business (i.e., convenience stores, restaurants, retail stores, liquor stores, etc.)? If the business type matches an entity on the high risk list, the business is a high risk. 3. Will your business be engaging in any of these activities? Check cashing, currency dealing or exchange, money orders, travelers, store value cards, money transfer services (i.e. Western Union). • if the business offers any of these services then the business is considered a Money Service Business (MSB) and should be classified as High Risk. 4. Will the business account be under private banking service? Please review the entire list of high risk business to make a final determination. • Private banking relationships will be classified as high risk. Enhanced Customer Due Diligence-CDD Procedures If you have identified a High Risk Customer during account opening, you should review all required items under Enhanced Due Diligence. Account officer should make reasonable efforts to document and obtain (in the system or in a memorandum) the following additional information. Any memorandums should be sent to the BSA Officer. If the BSA Department determines that your high risk customer is subject to expanded review procedures because it represents a higher risk to the Bank, the BSA Officer will require the information below to make a final determination on the customer relationship and account activity: Expanded Review Procedures for Enhanced Due Diligence (For Business Accounts (foreign and domestic), Cash-Intensive Businesses, and Non-Governmental Organizations and Charities) • Ensure the Bank has obtained all proper identification for all signers and /or owners; • List a description of the principal line of business and all types of business operations the customer engages in;

For Training Purposes Only

Page 27