BSA/AML Student Exercises Dec. 2022

Please refer to the "Politically Exposed Person" (PEP) for a detail description on Enhanced Due Diligence requirements. The opening of any PEP account must be approved by the BSA/OFAC Officer before the account is opened. If the BSA/OFAC Officer determines after the fact that an account is a PEP account, the risks are to be carefully evaluated and appropriate steps should be taken, including ongoing risk based monitoring of the PEP account to ensure the account is being used as anticipated. It is the policy of the Bank to refuse to open a private banking account, suspend transaction activity of the account, file a suspicious activity report, or close the account in the event that appropriate due diligence procedures cannot be performed. The BSA Officer must be contacted immediately. Note: If the BSA Department determines that your high risk customer is subject to expanded review and needs further enhance due diligence, the account officer will be notified promptly. Foreign Correspondent Banking — Recordkeeping and Enhanced Due Diligence Program It is against AJ & R Bank's policy to establish, maintain, administer or manage a correspondent account in the United States for, or on behalf of, a foreign shell bank. The Bank has implemented procedures to ensure that any correspondent account established, maintained, administered, or managed by our Bank for a foreign bank is not being used by that foreign bank to indirectly provide banking services to a foreign shell bank. Correspondent Account is an account established by a: A. Bank for a foreign bank to receive deposits from, or to make payments or other disbursements on behalf of the foreign bank, or to handle other financial transactions related to the foreign bank. For purposes of this definition, the term account as applied to banks means: A. Any formal banking or business relationship established by a bank to provide regular services, dealings and other financial transactions; and B. Includes a demand deposit, savings deposit or other transaction or asset account and a credit account or other extension of credit. Offshore Bank is any foreign bank that is barred, pursuant to its bank license, from conducting banking activities with the citizens of, or with the local currency of, the country that issued the license; but does not include a regulated affiliate. Foreign Shell Bank is defined as a foreign bank without a physical presence in any country. Special Due Diligence Program For Foreign Correspondent Accounts The Bank has established a Foreign and High Risk Correspondent Due Diligence Program that includes appropriate, specific, risk based and where necessary enhanced policies, procedures and controls that are reasonably designed to enable the Bank to detect and report on an ongoing basis any known or suspected money laundering activity conducted through or involving any correspondent account established, maintained, administered or managed by the Bank for a foreign financial institution. Customer Due Diligence for All Foreign Correspondent Accounts 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.

For Training Purposes Only

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