BSA/AML Examiner School Case Study

Internal Use Only

Intermediary financial institutions must pass on all of the information received from a transmitter's financial institution or the preceding financial institution, but they have no duty to obtain information not provided by the transmitter's financial institution or the preceding financial institution. Responsibilities of Beneficiary's Banks When our Bank acts as the beneficiary's bank, it is the bank identified in a payment order as the account of the beneficiary, the person to be paid under the transfer order, is to be credited pursuant to the order or otherwise is to make payment to the beneficiary. If the beneficiary is an established customer of the beneficiary bank, you must retain either the original or a microfilm or electronic record of the payment. Generally, since it usually is a deposit to an account, your normal recordkeeping rules cover this. Recordkeeping Requirements for Incoming Wires For each payment order of $3,000 or more that the Bank accepts as a beneficiary's bank, the Bank must retain a record of the payment order. Pay Upon Proper Identification Currently our Bank does not process any PUPID wire transfers to non-customers. Abbreviations and Addresses Although the Travel Rule does not permit the use of coded names or pseudonyms, the rule does allow the use of abbreviated names, names reflecting different accounts of a corporation (i.e., XYZ Payroll Account), and trade and assumed names of a business ("doing business as") or the names of unincorporated divisions or departments of the business. Customer Address The Travel Rule allows the use of physical mailing addresses only. Post office boxes can be used as an alternate address for mailing purposes, as long as the institution maintains the transmitter's physical address on file. Retrievability Rules Records related to these transactions must be maintained for five years. All Information retained by the Bank (originating bank) must be retrievable by reference to the name of the originator and account number. Intermediary banks have no retrievability rules under the amended rules. OFAC Compliance The customer identification program (CIP) procedures in the BSA now require the Bank to verify all new customers against the lists published by the Office of Foreign Assets Control (OFAC). It is against the law to do business with or for any person or entity on the list, and you can't know who that is unless you verify transactions. In today's BSA examination climate, it is likely that if you do not check all outgoing and incoming international wires, you might find the Bank under a regulatory enforcement order. The Best Practice is to verify each of the parties to each outgoing and incoming wire against the OFAC list. This means you check the name of your customer, his customer, and the ultimate beneficiary bank. For foreign wires, the beneficiary bank is not the correspondent bank through which you send the wire; it is the bank in the foreign country. Please refer to the OFAC Policy and Procedures.

For Training Purposes Only

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