BSA-AML Examiner School eBook

Bank Secrecy Act Assessment (Continued)

check is purchased to ensure that the correct information is documented. Additional training is scheduled with Audit Firm Representative in September 2016.

SUSPICIOUS ACTIVITY MONITORING AND REPORTING Management failed to monitor customer and employee activity for suspicious activity since the prior examination. There is no documentation maintained for any type of suspicious activity monitoring. During the examination, the kiting report, large transaction report, and large change in account balance report were requested. After reviewing the kiting report, four instances were identified that required further research. Two instances were determined to be suspicious and require a SAR be filed. The other two instances require further research by management. Management is currently researching to determine if SARs are necessary. Apparent violations of Part 353.3(a)(2) of the FDIC Rules and Regulations are cited for failure to file a SAR for criminal violations aggregating $5,000 or more. Refer to the Violations of Laws and Regulations pages for further details. Interim BSA Officer filed the two necessary SARs in August 2016. During the examination, it was discovered that a former teller was suspected of stealing a small sum of money from her teller drawer. Additionally, the teller shorted several tellers during a money-exchange scheme of purchasing smaller or larger bills from different tellers. A SAR should be filed any time a director, officer, employee, agent of the institution, or an affiliate of the institution is involved in criminal violations in any amount. An apparent violation of Part 353.3(a)(1) is cited for failing to file a SAR for suspicious transactions conducted by an insider. Refer to the Violations of Laws and Regulations pages for further details. Interim BSA Officer filed the SAR in August 2016. Suspicious activity monitoring and reporting are critical internal controls. Proper monitoring and reporting processes are essential to ensuring that the bank has an adequate and effective BSA compliance program. The Board and management must ensure that appropriate policies, procedures, and processes are in place to monitor and identify unusual activity. The Board and management should ensure adequate staff is assigned to the identification, research, and reporting of suspicious activities. Management should perform a review of all reports that could indicate suspicious activity since May 2015, to ensure there is no other suspicious activity that they failed to detect. Management should ensure that wire transfer activity is included in the review for suspicious activity. Management should incorporate regular employee account reviews to ensure any unusual or suspicious activity is identified and appropriately reported. Employees should receive training on suspicious activity monitoring and the internal procedures for reporting such activity to the BSA Officer or other approved individual(s) for investigation. Interim BSA Officer stated that Audit Firm Representative will be providing training in September 2016. She further committed to ensure employees receive training on internal policies, processes, and procedures by September 30, 2016.

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