ABA Banking Journal - June 2008 - (Page 56)

COMPLIANCE CLINIC HANDLING PEPS continued from page 52 tion by senior foreign political figures and their associates. Because the risks presented by PEPs will vary, identifying, monitoring, and designing controls for these accounts and transactions should be risk-based.” http://www. ffiec.gov/bsa_aml_infobase/ pages_manual/OLM_087.htm Additionally, based on the requirement to establish a risk-based approach, the manual provides that “[b]anks should establish risk-based controls and procedures that include reasonable steps to ascertain the status of an individual as a PEP and to conduct risk-based scrutiny of accounts held by these individuals. Risk will vary depending on other factors such as products and services used and size or complexity of the account relationship. Banks also should consider various factors when determining if an individual is a PEP, including: official responsibilities of the individual’s office.; the nature of the title (e.g., honorary or salaried); level of authority over government activities or other officials, and access to significant government assets or funds.” For additional information, refer to the Wolfsberg FAQs on PEPs, recently updated. http://www.wolfsberg-principles.com/faq-persons.html If an employee of the bank involved in the SAR filing(s) leaks information to the press, what would be the potential penalties if they were caught? There are a variety of penalties which can be assessed as a result of violations of the BSA reporting requirements, including both civil and criminal penalties. These penalties are covered in 31 USC Section 5321 and can range from $25,000 up to $500,000 in fines, and up to five years imprisonment, depending on the severity of the violation and intent of the party committing the act. Ramifications of such actions differ on a case-by-case basis, but they may include not only civil and criminal penalties as described, but also termination of employment for the employee and reputational damage for your institution. What rules govern other disclosures of suspicious activity reporting? Be aware of your institution’s protections under the Safe Harbor provision under 31 USC 5318(g)(3), which provides protection from civil liability for all reports of suspicious activity made to appropriate authorities. Specifically, “[i]f a financial institution or any director, officer, employee, or agent of any financial institution, voluntarily or pursuant to this section or any other authority, reports a suspicious transaction to a government agency—(i) the financial institution, director, officer, employee, or agent may not notify any person involved in the transaction that the transaction has been 56 JUNE 2008/ABA BANKING JOURNAL http://www.ffiec.gov/bsa_aml_infobase/pages_manual/OLM_087.htm http://www.wolfsberg-principles.com/faq-persons.html http://www.wolfsberg-principles.com/faq-persons.html http://www.moneygram.com

Table of Contents Feed for the Digital Edition of ABA Banking Journal - June 2008

ABA Banking Journal - June 2008 Contents Editor’s Column Do Fee-based Services Have an Edge? Snapshot: Net Interest Margins Vary Sharply with Size 100th Anniversary: Then & Now Letters ABA Resources ABA Chairman’s Position "What? No Annual Surprise Bonus?" Pass the Aspirin Cover Story: Top Community Banks: How They Did... ...And How They Did It Charter Bank First East Side Savings Bank Mackinac Financial Corp. The Peoples Bank Managing the E-mail Monster In Brief Handling PEPs in the Age of "L'affaire Spitzer" Mailbox Banker’s Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - June 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.