BSA/AML Student Exercises Dec. 2022

• Although attempts to launder money through the Bank can originate from many different sources, certain kinds of businesses, customers, transactions, or geographic locations may lend themselves more readily than others to potential criminal activity. According to bank regulators, the following types of businesses/customers could be a potential source of money laundering. These customers present an element of risk that will require additional documentation and additional monitoring over and above that necessitated in routine customer relationship. "High-Risk" Examples include: Businesses/Customers • Nonresident aliens (NRA) and accounts for foreign individuals • Private Banking Customers • Senior foreign politically exposed person (PEPs) and their immediate family members and close associates. • Embassy and foreign consulate accounts • Nontraditional financial entities (NBFI), such as: o Currency exchange houses, also known as giros or casas de cambio o Money transmitters, and check cashing facilities o Money Services Business-MSB (i.e. gas station, convenient stores, and grocery stores) • Gambling Facilities (i.e., 8 liners, video gambling and amusement entertainers, maquinitas) • Casinos and card clubs • Financial institutions such as jewel, gem, and precious metal dealers, pawnbrokers, loan finance co., Travel agencies. • Businesses that engage in vehicle sales, including: car, boat and plane dealerships; used cars or truck dealers; machine parts manufacturers and ship, bus and plane operators. • Foreign corporation and domestic business entities, particularly offshore corporations and banks located in tax or secrecy havens, domestic shell companies and international business corp. • Leather goods stores, Broker/dealers, Import/export companies, Auctioneers, Telemarketers • Deposit brokers, particularly foreign deposit brokers • Professional service providers (lawyers, IOLTA accountants, investment brokers, doctors, real estate brokers) • Cash-intensive businesses, such as convenience stores, restaurants, retail stores, liquor stores, cigarette distributors, privately owned ATMs, vending machine operators and parking garages • Non-government organizations and charities (foreign and domestic) Banking functions and transactions that need special attention: • Offshore international activity • Deposit-taking facilities • International correspondent banking accounts • Electronic and Internet banking • Wire transfers/cash management functions • Transactions in which the primary beneficiary or counterparty is undisclosed • Loan guarantees schemes • Transactions involving large amounts of traveler's checks, official bank checks, money orders and prepaid access cards. • Electronic transactions that permit the rapid movement of currency (i.e.., foreign exchange transactions followed by payment into another jurisdiction).

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