Introductory BSA/AML Examiner School, Atlanta, CA

Bank of Smithville USA

Page 9

The Board has designated Ashley Marks as the BSA Officer and, while both she and her staff appear capable and dedicated to the performance of their duties, the lack of sufficient personnel resources has resulted in significant backlogs. The addition of staffing does not appear to have been timely, with management relying on the 20XX merged institutions to supplement department staffing. Budgeted staffing for 20XX of 26 positions was only recently achieved and management has relied on contractors to fill the gap. The primary area requiring additional resources is the investigative unit, which monitors and resolves alerts, completes cases, and submits SARs. Currently, approximately 18 contractors are included in this process. The EDD area could benefit from additional resources, with management committing to review high-risk customers at least semi-annually (currently performed annually) and to effectively monitor POATM activity. CFO Moore stated he believed management had been proactive in providing personnel resources. He stated that a staffing analysis will be completed prior to year-end 20XX to determine the optimum staffing level for the BSA Department. Failure to file a timely SAR Section 353.3(b) of the FDIC Rules and Regulations requires, in part, that a covered financial institution must file a Suspicious Activity Report (Form FDIC 6710/06) within timeframes prescribed by this Section. The review identified that Verafin-generated alerts and the subsequent transfer to cases produced a systemic failure to filed SARs within regulatory timeframe requirements. In most instances, sufficient information was available to determine that a SAR needed to be submitted when the alert was reviewed; however, the SAR was generally prepared several months after being transferred to a case. Several examples of these late filings are noted below: SAR #1 – An alert was generated by Verafin due to potentially structured cash withdrawals between May 17, 20XX and January 5, 20XX. In each of six instances, checks for $10,000 were presented for cash on the customer’s account made payable to various family members. Four checks for $10,000 each were presented between December 28, 20XX and January 5, 20XX. A case was opened on January 9, 20XX, but a SAR wasn’t filed until June 27, 20XX. SAR #2 – An alert was generated due to cash-in activity between September 26 - December 28, 20XX, where a retired customer would access their safe deposit box and then subsequently deposit cash in the amounts of $9,700, $9,800, and $9,800. Due to these transactions, a case was created on January 5, 20XX, but a SAR wasn’t filed until June 27, 20XX. SAR #3 – An internal alert was received in December 20XX for potential structured cash deposits involving four cash deposits on three consecutive days (December 13-15, 20XX) totaling $11,000. A case was created due to this alert on January 27, 20XX, but an SAR wasn’t filed until June 27, 20XX.