BSA/AML Student Exercises Dec. 2022

America and starts transmitting funds on a regular basis to another part of the world, the unexplained change in business practices may be indicative of suspicious activity; or 5. A money transmitter or seller/issuer of money orders deposits currency significantly in excess of expected amounts, based on the due diligence information that was assessed for the particular MSB, without any justifiable explanation, such as an expansion of business activity, new locations, etc. XII. Suspicious Activity Report (SAR) Policy and Procedures Overview It is the intent and policy to comply with statutory and regulatory requirements for monitoring, detecting and reporting suspicious activities. The Bank wants to ensure that an effective system for detecting and reporting suspicious activity is established so the proper law enforcement agencies are promptly notified. Note: If any Bank employee becomes aware of any suspicious activity by either a Bank customers or an employee, he/she should promptly report the matter to the BSA Officer. The BSA officer and other staff aware of the matter should keep the information confidential. This policy encourages the reporting of suspicious activity and ensures the employee reporting the incident complete anonymity. The Bank is required to file a Suspicious Activity Report (SAR) for any matter that the Bank has a basis to believe is a known or suspected violation of federal criminal law. The SAR is to be completed in its entirety. The BSA Officer will be the preparer of the SAR and will provide a full description of the suspicious activity and explain any multiple events in chronological order. Only the SAR is to be sent to FinCEN, any supporting documentation will be retained by the Compliance Department. Please refer to the Anti-Money Laundering Procedures for more information on detecting suspicious activity. Suspicious Activity Reporting Process Anti-Money Laundering Program System to identify, research, and report suspicious activity All employees are encouraged to refer all unusual activity to the BSA Officer for further research and review the unusual activity. The BSA Officer, along with the Senior Management, will evaluate the unusual activity for a final decision to file a SAR. Proper documentation will be retained by the BSA for those decisions made to not file a SAR. The BSA Department will provide staff with detailed guidance on recognizing usual account activity. Refer to Anti-Money Laundering Procedures. Automated and manual transaction monitoring is also implemented to detect suspicious activity. Reporting Process If the bank determines it is necessary to report a suspected illegal activity to law enforcement authorities, the BSA Officer and the Senior Management will carefully review all known facts and maintain documentation on this process. The BSA officer will prepare the SAR form and will be filed with the local agencies, other than 0CC and Board of Directors, subject to the provision of the Right to Financial Privacy Act. The SAR will be filed within the time frame established by the regulation. (The SAR will be filed no later than 30 calendar days after the date of discovery or notification of the suspicious activity. If no suspect is identified on the date of detection of an act, management may delay filing the SAR for an additional 30 calendar days. However, in no case will management delay reporting a SAR to federal authorities more than 60 calendar days after the date of detecting a known or suspected

For Training Purposes Only

Page 38