BSA/AML Examiner School Case Study

Internal Use Only

Maintaining License Information The Bank's BSA/OFAC Officer maintains copies of customers' OFAC specific licenses on file to verify whether a customer is initiating a legal transaction. If it is unclear whether a particular transaction is authorized by a license, it is the responsibility of the BSA/OFAC Officer to confirm this with OFAC. Maintaining copies of licenses assist Bank personnel in the event another banking institution in the payment chain requests verification of a license's validity. Copies of licenses should be maintained for five years, following the most recent transaction conducted in accordance with the license. The BSA Department will submit license applications to OFAC in letter format, with the exception of license applications for the unblocking of funds transfers. Applications for the unblocking of funds transfers must be submitted using the form entitled "Application for the Release of Blocked Funds," accompanied by two complete copies of the entire submission. This form requires information regarding the date of the blocking, the banks involved in the transfer, and the beneficiary and amount of the transfer. Applications are to be sent to the Licensing Division of OFAC. The Bank also requires that a statement is obtained from the licensee as a matter of procedure that the transaction is in accordance with the terms of the license, assuming the Bank does not know or have reason to know that the statement is false in the case of a transaction performed under general license (or, in some cases, a specific license). Blocking/Rejecting Transactions The BSA Department has implemented procedures for handling and reporting transactions that are validly blocked or rejected under the various sanctions’ programs. All staff must make sure that business is not conducted with blocked or specially designated countries, entities or individuals including in the opening of new accounts and in handling wire transfers and other funds transfers. Note: An audit trail must be maintained in order to reconcile all blocked funds. This will include tracking the amount of blocked funds, the ownership of those funds, interest paid on those funds and the release of blocked funds pursuant to license. The Bank must file initial and annual reports of blocked property, reports on rejected funds transfers and litigation reports when required by OFAC. The Bank must block fund transfers that are remitted: • By or on behalf of a blocked individual or entity; • To or through a blocked entity; • In connection with a transaction in which a blocked individual or entity has an interest. If the Bank receives instructions to make a payment that falls into one of these categories, the Bank will execute the payment order/wire transfer and place the funds into a blocked account. A wire transfer cannot be canceled or amended after the Bank has received it. Once assets are blocked, the Bank will release them only by specific authorization from the U.S. Treasury. The Bank will report all blocks to OFAC within 10 days of occurrence. The Bank recognizes that every Bank transaction is potentially subject to a blocking under OFAC regulations. U.S. law requires that assets and accounts be blocked when such property is located in the United States, is held by U.S. individuals or entities, or comes into the possession or control of U.S. individuals or entities.

For Training Purposes Only

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