BSA/AML Examiner School Case Study

Internal Use Only

OFAC Compliance Program, includes the following elements: Identification of High Risk Business Areas The Bank periodically conducts a risk assessment of its product lines to help identify high risk areas for OFAC transactions. Implementation and Support of Internal Controls Methods The Bank maintains proper internal controls that are further addressed in the OFAC procedures and processes which help identify suspect accounts and transactions to block and report such instances to OFAC. The objective for these internal controls is as follows: OFAC: Flagging and Review of Suspect Transactions and Accounts The Bank has implemented procedures to address the flagging and review of transactions and accounts for possible OFAC violations via FIS/OFAC Tracking SYSTEM and manual methods. These procedures allow Bank personnel to compare names provided on the OFAC list with the names in Bank data base files to help flag accounts and block transactions involving sanctioned individuals and countries. This monitoring enables Bank personnel to flag close name derivations for review and possible action, especially in high risk and high volume areas. In addition, it is the policy of the Bank to compare the names of all individuals, business entities and their principals requesting to open a new account, product or service (deposit or lending based) with OFAC lists prior to allowance of any transactions on such accounts. Established accounts, once scanned, are periodically compared against OFAC updates. Inquiry Procedures The FIS/OFAC Tracking System is provided by our data processing system FIS. The system automatically does an initial screening of new accounts. The system also downloads any OFAC updates and scans our entire database for possible new matches. Initial Scanning for OFAC The FIS/OFAC Tracking System will automatically do an initial screening of new accounts (CIF input). The OFAC system compares the names and addresses of new customers to the OFAC file and the OFAC Matching Word (list of hit word). If the OFAC system finds a hit between the name and address tines on the CIF and an entry in the OFAC file or an entry in the matching word listing, the employee will be prompt, the screen alerts the employee to the hit and the reason. The Kentucky Bankers Bank and FIS will also screen funds transfers' activity and ACH transactions daily for possible matches. Reports from OFAC- Kentucky Bankers Bank and FIS provides a daily report with all ACH transaction, wire transfer entries. The OFAC Activity report is reviewed daily by a designated person to ensure that all previous OFAC alerts were not positive matches. CIF OFAC Inquiries All established accounts, once the initial scan, are periodically compared against OFAC updates. Be aware that the OFAC list gets updated regularly. Sometimes the Office of Foreign Assets Control (OFAC) adds or deletes suspect names monthly, weekly and at times daily FIS will automatically upload the OFAC Listing and any new updates from the US Department of the Treasury's website into our data processing system. Every time there is an update on the OFAC Listing our data processing system will advise the BSA Department and will automatically run it against our entire customer database for any possible matches. Each customer name or miscellaneous information such as an alternative name and

For Training Purposes Only

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