BSA/AML Student Exercises Dec. 2022

checks generally presents lower money laundering risks than a check casher that cashes any type of third-party check or cashes checks for commercial enterprises (which generally involve larger amounts). 3. Anticipated account activity. The Bank determines the expected services that the MSB will use, such as currency deposits or withdrawals, check deposits or funds transfers. For example, a MSB may operate out of one location and use one branch of the Bank, or may have several agents making deposits at multiple branches throughout the Bank's network. In addition, the Bank also has a sense of expected transaction amounts. 4. Purpose of the account. The Bank understands the purpose of the account for the MSB. For example, a money transmitter might require the Bank account to send funds to its principal U.S. clearing account or may use the account to send funds cross-border to foreign-based agents. The Bank's risk assessment is a composite of multiple factors, and depending upon the circumstances, certain factors may be weighed more heavily than others. Examples of potentially lower risk indicators for an MSB are: 1. Primarily markets to customers that conduct routine transactions with moderate frequency in low amounts; 2. Offers only a single line of MSB product (for example, only check cashing or only currency exchanges); 3. Is a check casher that does not accept out of state checks; 4. Is a check casher that does not accept third party checks or only cashes payroll or government checks; 5. Is an established business with an operating history; Examples of potentially higher risk indicators for an MSB are one that: 1. Allows customers to conduct higher amount transactions with moderate to high frequency; 2. Offers multiple types of money services products; 3. Is a check casher that cashes any third party check or cashes checks for commercial businesses; 4. Is a money transmitter that offers only, or specializes in cross border transactions, particularly to jurisdictions posing heightened risk for money laundering or the financing of terrorism or to countries identified as having weak anti-money laundering controls; 5. Is a currency dealer or exchanger for currencies of jurisdictions posing heightened risk for money laundering or the financing of terrorism or countries identified as having weak anti-money laundering controls; 6. Is a new business without an established operating history; or 7. Is located in an area designated as a High Risk Money Laundering and Related Financial Crimes Area or a High-Intensity Drug Trafficking Area. Due Diligence Guidelines for Higher Risk Customers The Bank's due diligence is commensurate with the level of risk of the MSB customer identified through its risk assessment. If the Bank's risk assessment indicates potential for a heightened risk of money laundering or terrorist financing, it is the responsibility of the BSA Department to conduct further due 6. Only provides services such as check cashing to local residents; 7. Is a money transmitter that only remits funds to domestic entities; or 8. Only facilitates domestic bill payments.

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