2023 BSA/AML Examiner School - Series 1

BSA/AML Examiner School - Series 1

March 21- 30 , 202 3 Virtual

@ www.csbs.org � @csbsnews

CONFERENCE OF STATE BANK SUPERVISORS 1 300 I Street NW / Suite 700 / Washington, DC 20 005 / (202) 296-2840

BSA/AML Examiner School Live Virtual March 21 – 30, 2023

Week 1 Tuesday, March 21, 2023 1:00 pm – 1:30 pm

Introduction & Day One BSA Review

FFIEC BSA/AML Examination Manual

1:30 pm – 2:15 pm

FFIEC BSA/AML Examination Manual ‐ Exercise

2:15 pm –2:30 pm

Break/Ice Breaker

2:30 pm – 2:45 pm

FinCEN Database

2:45 pm – 3:00 pm

FinCEN Database – Exercise

3:00 pm – 4:00 pm

Wednesday, March 22, 2023 1:00 pm – 1:30 pm

Introduction & Review

Risk Assessment

1:30 pm – 2:00 pm

Risk Assessment ‐ Exercise

2:00 pm – 2:30 pm

Break/Ice Breaker

2:30 pm – 2:45 pm

Risk Assessment ‐ Exercise

2:45 pm – 3:45 pm

Exam Planning

3:45 pm – 4:00 pm

Thursday, March 23, 2023 1:00 pm – 1:30 pm

Introduction & Review

Exam Planning

1:30 pm – 2:00 pm

Exam Planning ‐ Exercise

2:00 pm – 2:45 pm 2:45 pm – 3:00 pm

Break/Ice Breaker

Exam Planning ‐ Exercse

3:00 pm – 4:00 pm

Week 2 Tuesday, March 28, 2023 1:00 pm – 1:15 pm

Introduction & Review Exam Scenario Assignment

1:15 pm – 2:00 pm

Independent Work – Exam Scenario

2:00 pm – 3:15 pm 3:15 pm – 4:00 pm

Breakout Group Discussions

Wednesday, March 29, 2023 1:00 pm – 1:10 pm

Introduction & Review

Moderated Monitoring System Discussion

1:10 pm – 2:45 pm 2:45 pm – 3:00 pm 3:00 pm – 3:30 pm 3:30 pm – 4:00 pm

Break/Ice Breaker Full Group Discussion Exam Scenario ‐ Outcome

Thursday, March 30, 2023 1:00 pm – 1:30 pm

Introduction & Review

Law Enforcement Presentation

1:30 pm – 2:30 pm

Break/Ice Breaker

2:30 pm – 2:45 pm

Examiner Tools/Resources

2:45 pm – 3:30 pm

Wrap Up

3:30 pm – 4:00 pm

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Virtual BSA/AML Examiner School Exam Planning – Session 1

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Introductions

NAME

STATE AGENCY

YEARS OF EXAMINATION EXPERIENCE & WITH BSA

FUN FACT ABOUT YOU

SOMETHING YOU HOPE TO LEARN DURING THIS CLASS

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Instructor Contact Information

BSA Examiner Specialist Nebraska Department of Banking & Finance Jaunita.Koerner@nebraska.gov Jaunita Koerner

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Instructor Contact Information

Senior Examiner West Virginia Division of Financial Institutions TMcVey@wvdob.org Tom McVey

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Instructor Contact Information

Training Coordinator Kentucky Department of Financial Institutions Jessica.Southworth@ky.gov Jessica Southworth

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Go to www.kahoot.it and enter Game PIN provided

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Session Learning Objectives: 1. Utilize the Bank Secrecy Act/ Anti-Money Laundering Examination Manual

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Session Learning Objectives: 2. Understand tools provided by the

FinCEN database and how they can assist with exam planning

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Virtual BSA/AML Examiner School FFIEC BSA/AML Examination Manual

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Presentation

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April 2020 Updates

1.Risk Focused Supervision 2.Assessing Compliance 3.Risk Assessment 4.Developing Conclusions & Finalizing the Exam

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February 2021 Updates

1. Introduction –Assessing Compliance with BSA Regulatory Requirements 2. Customer Identification Program 3. Currency Transaction Reporting 4. Transactions of Exempt Persons

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June 2021 Updates

1.

International Transportation of Currency or Monetary Instrument Reporting

2.

Purchase and Sale of Monetary Instrument Recordkeeping

3.

Reports of Foreign Financial Accounts

4.

Special Measures

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December 2021 Updates

1.

Introduction – Customers (new) Charities and Nonprofit Organizations Independent Automated Teller Machine Owners or Operators Politically Exposed Persons

2.

3.

4.

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FFIEC BSA/AML Examination Manual

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Introduction

• Bank Secrecy Act of 1970 (aka Bank Records and Foreign Transaction Act)

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Introduction

• Money Laundering Control Act of 1986

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Introduction

• Annunzio-Wylie Anti Money Laundering Act (1992)

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Introduction

• USA PATRIOT Act (2001)

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Introduction

• AML Act 2020* - Aims to improve: • Laws relating to ML • Beneficial ownership reporting

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Introduction The Anti-Money Laundering Act of 2020 (AML Act) amended subchapter II of chapter 53 of title 31 United States Code (the legislative code commonly referred to as the “Bank Secrecy Act” or “BSA”). The AML Act uses the term “Anti-Money Laundering/ Countering the Financing of Terrorism program”

rather than “BSA/AML compliance program.” The use of “AML/CFT” has the same meaning as the previously used “BSA/AML.”

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Compliance Program Section

1.Scoping and Planning 2.Risk Assessment 3.Assessing the Compliance Program 4.Developing Conclusions and Finalizing the Exam

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Compliance Program Section

1.Scoping and Planning 2.Risk Assessment 3.Assessing the Compliance Program 4.Developing Conclusions and Finalizing the Exam

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Compliance Program Section

1.Scoping and Planning 2.Risk Assessment 3.Assessing the Compliance Program 4.Developing Conclusions and Finalizing the Exam

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Compliance Program Section

1.Scoping and Planning 2.Risk Assessment 3.Assessing the Compliance Program 4.Developing Conclusions and Finalizing the Exam

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Other Sections of the Manual

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Regulatory Requirements

• Assessing Compliance with BSA Regulatory Requirements

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OFAC

• Office of Foreign

Assets Control (OFAC)

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Program Structures

1. Compliance Program Structures 2. Foreign Branches and Offices of U.S. banks 3. Parallel Banking

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Regulatory Requirements (Other Risks)

• Risks Associated with Money Laundering & Terrorist Financing

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Appendices

• Appendix 1 • Appendix A • Appendix C • Appendix D

• Appendix E • Appendix F • Appendix J & M • Appendix Q

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FFIEC BSA/AML InfoBase https://bsaaml.ffiec.gov

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Examination Manual Exercise Go to www.menti.com and use the code provided

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Questions

Virtual BSA/AML Examiner School FinCEN Database

Presentation

FinCEN Database

FinCEN Database

What is FinCEN?

FinCEN Database

How does the database help examiners?

FinCEN Database

FinCEN Knowledge Library

FinCEN Database

Highly Confidential Information

FinCEN Database

FinCEN Database Exercise

Questions

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Virtual BSA/AML Examiner School Risk Assessment

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Chatstorm - Practice 1. In the chat box, enter one word that describes your weather today. 2. Do NOT hit enter until instructed to! 3. See all the responses.

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Chatstorm - Review 1. In the chat box, enter one thing you learned during class yesterday. 2. Do NOT hit enter until instructed to! 3. See all the responses.

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Go to www.kahoot.it and enter Game PIN provided

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Session Learning Objectives: 1. Discuss risk assessment and its role in BSA/AML compliance

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Session Learning Objectives: 2. Identify BSA/AML risks

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Session Learning Objectives: 3. Apply concepts by developing an exam scope and documenting the plan

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Presentation

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Appendix I: Risk Assessment Link to the BSA/AML Compliance Program

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Risk Assessment Development: 1. Identify risk categories 2. Analyze risk categories

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Identification of risk categories: • Products & services • Customers • Geographic locations • Other areas • Size & complexity of the institution

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Product & service risk:

• Funds transfers • Prepaid access

• Electronic banking • Non-customer sales

• Private banking • Pouch activities

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Customer base risk: • Money Service Businesses (MSBs) • Cash-intensive • Non-governmental organizations (NGOs) • Private ATMs

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Geographic risk: • High Intensity Drug Trafficking Areas (HIDTA) • High Intensity Financial Crime Areas (HIFCA) • Transient populations • Border proximity

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Appendix J: Quantity of Risk Matrix

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Develop a risk assessment? • FinCEN Database • Prior exam reports • Entry letter items • Discussions with management • Call Report & UBPR • Bank’s website

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Risk Assessment Exercise

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Questions

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Virtual BSA/AML Examiner School Exam Planning

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Presentation

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Go to www.menti.com and use the code provided

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Examination Scope

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Prior Exam Report & Workpapers

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Prior Exam Report & Workpapers

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Prior Exam Report & Workpapers

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Prior Exam Report & Workpapers

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Prior Exam Report & Workpapers

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Correspondence/Monitoring File

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Correspondence/Monitoring File

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Correspondence/Monitoring File

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Request List Items

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Request List Items

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Request List Items

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Request List Items

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Request List Items

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Request List Items

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FinCEN Data

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Transaction Testing Level

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Examination Scope

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Examination Plan

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Examination Plan

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Examination Plan

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Work Program

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Staff Responsibilities

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Document the Plan

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Exam Planning Exercise

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Questions

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Virtual BSA/AML Examiner School Automated Monitoring Systems – Exam Scenario

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Session Learning Objectives: 1. Provide examples of common exam issues

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Session Learning Objectives: 2. Apply concepts to an exam scenario exercise

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Breakout Group Discussions Automated Monitoring Systems

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Go to www.menti.com and use the code provided

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Full Group Discussion Automated Monitoring Systems

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Automated Monitoring Systems

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Virtual BSA/AML Examiner School Moderated Monitoring Systems Discussion

Go to www.menti.com and use the code provided

Session Learning Objectives: 1. Understand the role of automated monitoring systems

in BSA/AML compliance

Session Learning Objectives: 2. Discuss system risks, reports & parameters

Automated Monitoring Systems

Go to www.menti.com and use the code provided

Internal Use Only

Virtual BSA/AML Examiner School Law Enforcement

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Go to www.menti.com and use the code provided

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Session Learning Objectives: 1. Understand how SARs assist law enforcement

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Session Learning Objectives: 2. Discuss what

constitutes an effective SAR filing

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Session Learning Objectives: 3. Provide examples of investigations

that benefited from BSA/AML reporting

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Robert Hutt Criminal Analyst DHS | ICE | Homeland Security Investigations

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Presentation

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Questions

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Virtual BSA/AML Examiner School Examiner Resources

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Examiner Tools & Resources

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www.fincen.gov

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Questions

Automated Monitoring System Reports Listing

Abrigo

 ACH Transaction Report  ATM Transaction Report  Audit Log Review  Case Management Reports  Case Request Report  Case Request Transactions Report  Cash Transaction Report  Cash Transaction Report by TIN  Cash Volume Analysis  Cash Volume Detail Search  Cash Volume Stratification Report  Customer Search Report  Code List  Code List Detail Search  CTR Reports  Customer Profile Report  Duplicate Address Report  Grouped Daily Totals Structured Transaction Report  Import Detail Report  Import Integrity Detail Report  Import Summary Review Report  Keyword Search with Grouping Report  Missing or Invalid CIP Report

 NCCT Involved Transaction Report  Prepaid Access Card Aggregation Report  RBRR Apply Ratings Comparison Report  RBRR Code Detail Report  RBRR Code Report  RBRR Duplicate Point Assignment Report  RBRR HIDTA/HIFCA Comparison Report  RBRR HIDTA/HIFCA Zip Codes Report  RBRR History Report  RBRR Settings History Report  RDC Credit Limit Exception Report  RDC Deposit Transaction Report  Report File Detail Report  Scenario Reports  Statistical Management Report  Structured Transaction Report  Transaction Volume Analysis  Transaction Volume Detail Search  Transaction Volume Stratification Report  Transfer Activity Report  Vego Modified Record Log  Velocity Report  Wire Log Report  Wire Log Report by Beneficiary/Originator  Wire Log Report for Non-Validated Transaction

 Management Dashboard  Monetary Instrument Log

Automated Monitoring System Reports Listing

CSI (Computer Services, Inc.) - NuMonitor  Alert Definitions (a list of the current active alerts)

 Annual Alert Tally (total number of alerts by category, by month, by year)  List of Alerts over any criteria, over any date range (Online, PDF, Excel)  List of Responses to the alerts over an criteria, over any date range (Online, PDF, Excel)  List of Cases over any criteria, over any date range (Online, PDF, Excel)  Account Notes, Account Profiles (Online, PDF, Excel)  User Security information  NuMonitor SOC1 report (Institution can request from CSI)

Verafin

 CTRS Accepted  SARS Accepted  Alerts Acknowledged  Customers – All High Risk  Cases – All  Watch List Audit Logs  List of all exemptions (not just CTR exemptions)

Updated: 10/21/2021