BSA/AML Examiner School Case Study

Internal Use Only

As part of its enforcement efforts, OFAC publishes a list of individuals and companies owned or controlled by or acting for or on behalf of targeted countries. It also lists individuals, groups and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific. Collectively, such individuals and companies are called specially designated nationals (SDNs). Their assets are blocked, and U.S. persons are generally prohibited from dealing with them. OFAC also has published a list called NS-PLC, this list contains the names of individuals who are affiliated with terrorist organizations and have been elected to the Palestinian Legislative Council. The individuals listed on the NS-PLC List are PLC members who were elected on the party slate of a foreign terrorist organization, specially designated terrorist or specially designated global terrorist. Their names do not, however, appear on the SDN list. All transactions involving these individuals must be rejected. Training It is the policy of the Bank that all personnel receive adequate training on OFAC compliance consistent with our OFAC risk profile and how OFAC compliance relates to an employee's specific responsibilities. OFAC training is provided to all employees of the Bank and it is done in conjunction with the BSA Training. The BSA Department maintains records of all staff training. All Bank employees will receive general training/material on OFAC regulations within 90 days of employment and annually thereafter. The following departments will receive annual training: • Wire transfer • Operations and Lending • Automated clearinghouse (ACH) • Commercial loans/letters of credit • Retail banking — new accounts, tellers All areas of the Bank are responsible for implementation of compliance requirements, policies and procedures for OFAC regulations. Civil Penalties OFAC has independent authority to impose civil penalties for violations under several of the statutes that give rise to the OFAC regulations. Willful violations of the OFAC regulations, or neglect, or refusal to comply with any executive order issued in compliance with the OFAC regulations, may result in as much as twelve years of imprisonment, a $1 million corporate or personal fine, as well as forfeiture of funds or other property involved in violations. In addition, 18 USC 3571 provides that organizations or individuals convicted of violating a criminal statute may be fined the greater of the amount specified in the statute, or twice the pecuniary gain or loss from the violation and those individuals may be fined $250,000. Audit Program The external auditors will conduct independent annual audits of the Bank's OFAC policy and procedures. The Bank conducts internal audits on the effectiveness of the OFAC Compliance Program on an annual basis. Audit personnel are instructed to conduct a comprehensive evaluation of the Bank's OFAC policies, procedures and other compliance requirements to ensure the Bank has properly assessed its compliance risks across the spectrum of all of its activities. The external auditors will report the results of the audits to the Board of Directors. The reports will contain management responses and any corrective action taken to resolve audit exceptions.

For Training Purposes Only

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