BSA/AML Student Exercises Dec. 2022

• Conducted for the purpose of hiding or disguising funds from illicit activity. • Suspected of violating the federal money laundering statutes in any way. • Potentially designed to evade the reporting or recordkeeping requirements of the Bank Secrecy Act. • Believed by the Bank to be suspicious for any other reason. Note: If any bank employee becomes aware of or suspects criminal activity by either bank customers or employees, he or she should promptly report the matter to the BSA Officer. Structure Transactions It is illegal for any person to structure transactions with the Bank to evade the reporting requirement. It is also illegal for any employee to assist another person in structuring transactions to evade the reporting requirement. Therefore, no employee of the Bank should assist a person in structuring transactions to avoid a CTR. If a Bank employee suspects that person is structuring cash transactions to evade the reporting requirement of the BSA, the employee they will report his or her suspicious to the BSA Officer. Note: If a currency transaction exceeds $10,000 and is suspicious, the Bank will file both a CTR and SAR. If a currency transaction equals, or is below $10,000 but is suspicious, the Bank will file only a SAR. Identifiable Areas of Vulnerability that the Bank should be aware of, include: • Structured currency deposits to individual DDA, often well below the typical levels for structuring, with multiple daily deposits to multiple accounts of the same day. • Consumers' checking accounts that are used for a period of time and then become dormant. In some cases, the accounts may be overdrawn, perhaps as a further means of avoiding detection. • Personal checking accounts opened by foreign nationals who come to the bank together. • Multiple accounts opened on the same day or held by the same foreign nationals at various banks. • Increased in the frequency or amounts of currency deposits made by US business accounts holders who export to countries who have lenient money laundering laws. Note: If a Bank employee believes that a transaction or a series of transactions in currency are suspicious or questionable, they are to inform their supervisor immediately - regardless if the currency amount is over or under $10,000. If the BSA Officer deems the situation worthy, a "Suspicious Activity Report" (SAR) covering the specific transaction that triggered the suspicion will be completed. General "Red Flags" for Suspicious Activity • Any customer who attempts to structure a transaction to avoid reporting under the BSA. • A significant change in the cash transaction pattern (higher or lower). • For business accounts, several changes in ownership or control in a short period of time (less than one year). • A business (check casher) that begins to deposit an unusual amount of cash. Unless the business is closing, a check casher will be requesting large amounts of cash and depositing checks. The BSA officer must be contacted immediately since this account may be a Money Service Business that requires additional account information to maintain compliance. • A customer, after becoming aware that a report may be filed because identifying information has been requested, declines to follow through with a transaction which has already been initiated. • Consumers' checking accounts that are used for a period of time and then become dormant. In some cases, the accounts may be overdrawn, perhaps as a further means of avoiding detection.

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