BSA/AML Student Exercises Dec. 2022

Enhanced Customer Due Diligence-EDD If you have identified a High Risk Customer during account opening, you should review all required items under Private Banking Enhanced Due Diligence. The Bank has established these Private Banking Due Diligence procedures to detect and report any suspicious activity conducted through or involving any private banking account that is established, maintained, administered, or managed in the United States by the Bank. Account officer should make reasonable efforts to document and obtain (in the system or in a memorandum) the following additional information. Any memorandums should be sent to the BSA Officer. • Determine and document the identity of all nominal and beneficial owners of a private banking account. The Bank must have proper identification for all accountholders. • Determine and document whether any person identified is a senior foreign political figure. If the Non Residential Alien (NRA) is a "Politically Exposed Persons", be sure to advise the BSA Officer and follow the enhanced due diligence for Politically Exposed Person. Note: In the case of a private banking account for which a senior foreign political figure is a nominal or beneficial owner, the account officer should perform enhanced scrutiny of such account that will help the Bank detect and report transactions that may involve the proceeds of foreign corruption. • Determine the source(s) of funds deposited into a private banking account and the purpose and expected use of the account. The Bank must know: the current source of funds for the account; a description/history of the source of the customer's wealth; and the customer's estimated net worth, including financial statements. • Review the activity of the account to ensure that it is consistent with the information obtained about the client's source of funds and with the stated purpose and expected use of the account. This information is needed to guard against money laundering and to report any suspicious activity conducted to, from, or through a private banking account. • Nature of the customer and the customer's business. The source of the customer's wealth, the nature of the customer's business and the extent to which the customer's business history presents an increased risk for money laundering and terrorist financing. This factor is considered for private banking accounts opened and for Politically Exposed Persons (PEPs). • Provide the purpose and activity of the account. The size, purpose, types of accounts, anticipated activity of the account and the type of products and services used by the customer (i.e., domestic or international wires, cash deposits, ACH transactions, private banking services, etc.) • Customer's corporate structure. Document the type of corporate structure (i.e., IBCs, Shell companies (domestic or foreign), or PICs); the location of the private banking customer's domicile/home country and business (domestic or foreign). • Public information- Information known or reasonably available to the Bank about the private banking customer; if possible, the references or other information to confirm the reputation of the client. Enhanced Scrutiny of Private Banking Accounts for Senior Foreign Political Figures Enhanced Scrutiny of Private Banking Accounts for "senior foreign political figures will be risk-based. Reasonable steps to perform enhanced scrutiny may include conducting greater scrutiny of the customer's employment history and sources of funds, contacting branches of the U.S bank operating in the home country of the customer to obtain additional information about the customer and the political environment, or consulting publicly available information regarding the home country of the customer.

For Training Purposes Only

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