Topic: Bank Secrecy Act & Anti-Money Laundering (BSA/AML)
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Our BSA consultants are telling us that customers selling lottery tickets must maintain separate lottery accounts. Is that true?
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Yes, customers that sell lottery tickets (such as gas stations and convenience stores) are required to segregate lottery proceeds from other business funds under Illinois administrative rules for the state’s lottery. In addition, your customers’ contracts with the Illinois Lottery likely require them to maintain segregated trust accounts. The Illinois Lottery Retailer Agreement states that a retailer…
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Under the Customer Identification Program (CIP) requirements for account openings, can we accept a temporary Illinois ID with the expired, hole-punched ID? Or should we ask customers to come back with their permanent ID when received?
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We believe that the CIP regulations permit a bank to accept Illinois temporary paper IDs as valid identity documents, but your bank also may choose to not accept temporary paper IDs as a matter of policy. The CIP regulations require your bank to verify an individual’s identity after account opening. If verifying an individual’s…
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What is our potential liability when a customer deposits checks made out to a business name (“Smith & Associates”) that does not match the customer’s name (“123 LLC”)? The name “Smith & Associates” is not registered as a business entity or as a d/b/a name.
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Depositing these checks into your customer’s account without endorsements could raise a number of concerns. First, your examiners may criticize this practice due to the risk that your customer is using the unendorsed checks made out to a different payee to launder money or engage in other illegal activities. Second, your bank is risking liability…
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One of our business customers has an outside vendor process its payroll for all employees but one. For that employee, the business owner writes paychecks drawn on his personal account, which suggests that the business is circumventing immigration requirements for that employee. Does this suspicion require us to file a SAR, even though the company simply is circumventing IRS requirements?
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Yes, we believe a SAR is required due to your suspicion that the customer is employing an unauthorized alien. SARs are required whenever a bank suspects criminal activity involving or aggregating more than $5,000 in transactions conducted at or through the bank. The employment of an individual who is not authorized to work in the…
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Can you provide me with the exact verbiage that permits a financial institution to conduct on-site visits for its customers?
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The FFIEC's most recent BSA/AML Examination Manual states that customer due diligence information can be confirmed through banking references, correspondence, telephone conversations with the customer, and “visits to the customer's place of business.” Also, the manual specifically suggests conducting on-site visits for certain customers, such as third-party payment processors, cash-intensive businesses and money services businesses,…
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One of our customers initiated an ACH credit transaction to pay an individual who is a politically exposed person. The dollar amount is below $10, and after calling our customer, we learned that the payment was for an item the customer had purchased online. What the risks of processing the ACH transaction?
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From what you have told us, the risks of processing the ACH credit transaction appear to be low. The FFIEC BSA/AML Examination Manual requires financial institutions to establish policies, procedures and processes that provide for the appropriate scrutiny and monitoring of politically exposed persons (PEPs), particularly when a PEP is opening an account. However, financial…