Topic: Bank Secrecy Act & Anti-Money Laundering (BSA/AML)
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A community of Mennonite people moved to our area from another state. Select members of the community have driver’s licenses, but not all, and we are having difficulty verifying addresses — particularly for women who do not have driver’s licenses and are not listed on utility bills. What are the best CIP practices for this community?
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A bank’s Customer Identification Program (CIP) “must include risk-based procedures for verifying the identity of each customer to the extent reasonable and practicable.” Consequently, we recommend reviewing your CIP to determine whether you could accept non-documentary methods of verifying the identities of customers who lack common forms of identification. At a minimum, your CIP must…
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We have an attorney customer who issues checks to his clients drawn on his client trust account. When the clients (who are not customers) come to our bank to cash the checks, we have been issuing them personal money orders signed by a bank employee with the bank listed as the remitter. We do not want to list the clients as the remitter since our BSA policy prevents us from selling monetary instruments to noncustomers. We also do not want to issue cashier’s checks to the clients because we would like to be able to put a stop payment on an item if it is lost. Will this work, or will signing the money orders cause them to function like cashier’s checks?
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We believe that having your bank representative sign the customer’s personal money orders would cause them to be treated like cashier’s checks, in which case you would not be able to place a stop payment order on these items. A cashier’s check is defined in the Uniform Commercial Code (UCC) as “a draft with respect…
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Our bank is purchasing the custodial rights for a portfolio of brokered certificates of deposit (CDs) from a bank that previously was the deposit broker for the CDs. Our bank will become the deposit broker and custodian of the CDs, which have individual owners and are deposited at a separate bank. However, the CD accounts at the depository bank will be held in our name with our EIN, and we will receive a percentage of the interest from the CDs. Along with the portfolio, we will receive one year’s worth of physical records for the CDs and all prior records for the CDs in electronic form. The records will include the identifying information for the owners of the CDs that the selling bank obtained as part of its Customer Identification Program (CIP). We will not conduct our own CIP for these accounts. What are the record retention requirements for these documents?
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Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021. Please note that this change may affect the continued accuracy of this guidance as it pertains to the ECSA. We believe that your bank should retain any identifying information for the individual owners of…
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Our BSA Officer sought counsel from an attorney regarding a suspicious activity report (SAR) filing. I am the CEO of the bank, and when I asked about the nature of the guidance received, the BSA Officer said they were not allowed to tell me. Assuming the SAR is not based upon an action I have taken, is this accurate?
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We agree that generally SARs and related information may be shared with bank management and the bank’s board, provided that your assumption (that the SAR does not involve you) is correct. The Bank Secrecy Act (BSA) generally prohibits disclosures of a “SAR or any information that would reveal the existence of a SAR” to…
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Our BSA Officer does not want to open new trust accounts until we have tax ID numbers for every beneficiary of the trust, as well as other information — such as the legal fees and our own trust fees that we will charge to the trust. Delaying these account openings until we have collected this information is causing operational difficulties, for example when we urgently need to pay bills using trust funds, and it can be difficult to track down beneficiaries’ tax IDs, particularly for minors. Our preferred practice would be to open the trust accounts with the trust’s tax ID, in addition to other identifying information, and to obtain the beneficiaries’ lDs as soon as possible thereafter (while ensuring that we do not make any distributions to the beneficiaries in the meantime without obtaining their taxpayer IDs and running OFAC checks).
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We believe that FinCEN’s customer identification program (CIP) rules permit your bank to establish a procedure in which trust accounts are opened with the trust’s taxpayer ID, and you collect the beneficiaries’ taxpayer IDs “within a reasonable time” after the account has been opened — particularly given the safeguards your institution is taking before making…