ABA Banking Journal - October 2008 - (Page 59)

MIB X AL O and the corresponding money laundering challenges attached. So understanding the risks in a bank’s market is critical, and coming up with a BSA risk assessment that fits that market is the challenge. “It needn’t be 100 pages long,” said Rentschler, “but it should have enough detail to document what you are doing.” The bigger the institution, the greater the challenge is to have all players working on the basis of the same risk assessments and working from a common perspective of what constitutes this or that level of risk. One source of help that many bankers don’t avail themselves of is law enforcement. Rentschler noted that the filing of Suspicious Activity Reports is a good example of how law enforcement agencies can help. Banks can ask both enforcers and examiners two key questions: “What do you think is important?” and “What do you see going on in our market?” The answers “can be really enlightening,” said Rentschler and a bank with cooperative local agencies may be able to persuade them to pass their thoughts on to employees. “Law enforcement can do a lot of training of your folks at zip cost,” she advised. Much emphasis is put on automation in the BSA area, and while that is important, speakers noted that people represent the most expensive element in the compliance process. Much of the BSA/AML compliance process, whether it involves data collection up front or personal “radar” when dealing with customers, hinges on personal execution. Frequently this is not recognized, said Wimpling, when banks look at costs of BSA/AML compliance. “My management team had a stroke when they found out how much we were spending on filing SARs,” said Rentschler. Can proprietor pick a P.O.D. person to pay? Can a sole pro p r i e tor name a P.O.D. (Pa yable on Death) beneficiary on a bank account? Yes. Generally a sole proprietorship is a business structure in which the individual and his or her company are considered a single entity. Therefore, the sole proprietor has the same legal privileges he would have with an individual account, including the right to designate a POD beneficiary. Please note, however, that you should check your state’s laws to see if there is anything that would restrict this right in your state. Q. A. MSBs and their OFAC duties A re m o n ey s e r v i c e b u s i n e s s e s re q u i re d to d o O f f i c e of F o re i g n A s s e t s C o n t ro l s c a n s ? D o e s my b a n k h a ve a r e s p o n s i b i l i t y fo r e n s u r i n g t h i s i s d o n e by c u s to m e r s w h o a re MSBs? MSBs, as with all entities in the U.S., are required to comply with OFAC sanctions. For example, a liquor store or a grocery store is subject to OFAC sanctions whether or not they also happen to qualify as check cashers. You still have your own responsibilities for meeting the OFAC sanctions—as you do no matter what your customer does. Q. A. SAR reporting versus Right to Financial Privacy Act Handling the bank’s risk assessment More and more of the BSA/AML examination process revolves around the bank’s risk assessment. In a sense, the bank scripts its own examination, in that examiners will use the risk assessment as one of the yardsticks for determining how well the bank is discharging its BSA/AML compliance duties. Capital City Bank’s first risk assessment was actually put together by a consultant. This was helpful because it meant that the bank’s risk assessment process had a strong starting point. However, the latest round was handled by Wimpling on his own. “I feel I know the bank a lot better than a consultant does,” said Wimpling. Taking charge of the risk assessment process also creates opportunities for Wimpling, as the bank’s BSA/AML officer, to speak with functional parts of the bank about issues they are seeing in their areas and about the potential risks that their lines of business pose. Wimpling said he’s learned a great deal more about banking in the process of these meetings. He feels such knowledge is important to doing his job properly. He said he has also decided, in the course of the process, that BSA officers ought to be included in the product design process, to eliminate unnecessary risks at the outset. “It’s always easier to mitigate a risk at the front end than at the back end,” said Wimpling. Panelists stressed the need for a heavy dose of reality in structuring risk assessments. One example concerned creation of the bank’s “watch list” of customers rating special monitoring. In Subscribe at www.ababj.com Q. A. T h e I R S c o n ta c t e d o u r b a n k a n d re q u e s t e d a d d i t i o n a l i n fo r m a t i o n re l a t i n g to a c u s to m e r o n w h o m we r e c e n t l y f i l e d a SA R . I R S h a s a g re e d to fa x u s a w r i t t e n r e q u e s t fo r t h e i n fo r m a t i o n , b u t t h e fa x m a y n o t m e e t t h e p a ra m e t e r s i d e n t i f i e d i n t h e R i g h t to F i n a n c i a l P r i va cy Ac t . C a n yo u a d v i s e m e a s to w h e t h e r t h e d o c u m e n ta t i o n r e l i e d u p o n to f i l e a SA R i s to b e m a d e a va i l a b l e to l a w e n fo rc e m e n t a s a n ex c e p t i o n to c r i t e r i a s ta t e d i n t h e R i g h t t o F i n a n c i a l P r i va cy Act? Yes. You are permitted to give supporting documentation for a SAR to law enforcement, FinCEN, and your supervisory agency without RFPA concerns. IRS does have a Criminal Investigation Division that is considered “law enforcement.” See www.fincen.gov/statutes_regs/guidance/ html/Supporting_Documentation_Guidance.html MAILBOX continues with more questions and answers in the ABA Banking Journal Digital Magazine for October, at www.ababj.com Leslie Callaway, CRCM, and Mark Kruhm, CRCM, ABA compliance analysts, and other ABA experts, answer member questions here. Submit questions to: compliance@aba.com. D i s c l a i m e r : Our answers do not provide, nor are they intended to substitute for, professional legal advice. ABA BANKING JOURNAL/OCTOBER 2008 59 http://www.fincen.gov/statutes_regs/guidance/html/Supporting_Documentation_Guidance.html http://www.fincen.gov/statutes_regs/guidance/html/Supporting_Documentation_Guidance.html http://www.ababj.com http://www.ababj.com

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

ABA Banking Journal - October 2008
Contents
Editor’s Column
A Banker's View of FHA's "Hope for Homeowners" Program
Snapshot: Branch Sales Sag to Ten-Year Low
Covered Bonds Gain Interest after GSE Takeover
ABA Chairman’s Position
ABA Resources
Hot, Web, and Green
Rethinking Segmentation
Still Pushing the Envelope
Keep Regulation Functional
Capital Windfall?
Mortgage IT: Not This Year's Hot Property
Case in Point: Looking for Sales in All the Right Places
Put Your BSA/AML Program into Shape
Mailbox
Banker’s Mart
To Advertise/Index of Advertisers
Remembering Joe Kizzia, Veteren Editor of ABA Banking Journal
100th Anniversary: Then & Now
The Economy

ABA Banking Journal - October 2008

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