Topic: Bank Secrecy Act & Anti-Money Laundering (BSA/AML)
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We understand the statutory trusts are subject to the beneficial ownership provisions of FinCEN’s Customer Due Diligence Rule. How can we identify when a trust is a statutory trust? Will it be apparent from the trust documents?
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We recommend incorporating a question into your account opening questionnaires and customer due diligence (CDD) procedures to require your customers to identify whether they are a statutory trust (also called a “business trust”). Statutory trusts are a special type of entity that can engage in business or other activities. Unlike ordinary trusts, statutory trusts are…
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Is a wire transfer sent to Puerto Rico considered a domestic or an international funds transfer?
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For Bank Secrecy Act/Anti-Money Laundering (BSA/AML) purposes, a wire transfer to a person in Puerto Rico is treated as a domestic funds transfer. The BSA/AML regulations define the term “United States” to include Puerto Rico. For resources related to our guidance, please see: FinCEN BSA/AML regulations, 31 CFR 1010.100(o) (“Domestic. When used herein, refers to…
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We were recently told that the Customer Due Diligence (CDD) rule requires us to obtain beneficial ownership certification when a legal entity customer’s certificate of deposit or loan is renewed, even when there is no change to account. Is that true? Is there any chance that this requirement may be challenged in the future?
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Yes, until FinCEN issues clarifying guidance on this point, CD and loan renewals should be considered “new accounts” under the CDD rule for the purpose of obtaining beneficial ownership certifications. The CDD rule’s identification and certification requirements regarding beneficial ownership apply each time a “new account” is opened for a legal entity (unless the customer…
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An unidentified individual recently cashed several checks totaling about $10,000. The individual used a customer’s ID to cash several forged checks that were drawn on another person’s account. We reimbursed the payor bank for the losses but are not charging the customer. This incident prompted us to review our identity theft policy. When a customer is a victim of identity theft, we generally require them to fill out an ID Theft Affidavit. However, our policy is not clear on whether this incident constituted identity theft. Are there any regulations that would clarify when identity theft occurs? Also, do we need to file a SAR?
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If your institution’s ID Theft Affidavit is used for purposes of fulfilling the FCRA’s obligations to provide certain records to consumers who are victims of identity theft, we recommend using that law’s definition of an identity theft victim: “a consumer whose means of identification or financial information has been used or transferred (or has been…
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Our bank has a separate trust department. When an individual has both trust accounts and deposit accounts at our bank, can our trust department share information about that customer’s trust transactions with our BSA officer? Would we be required to inform our trust customers about this information sharing? Does it create any privacy concerns?
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Yes, your bank’s trust department may share information about customer accounts and transactions with your bank’s BSA officer without notifying the customers or raising privacy issues. Illinois and federal financial privacy laws limit the sharing of customer information with third parties, but they do not prohibit the sharing of customer information with other bank employees…
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We fired an employee for falsely inflating the hours she worked, resulting in overpayment. Do we need to file a suspicious activity report (SAR) regarding her conduct? We are a national bank.
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In our view, a SAR is not required in this situation, but it might be prudent to file one in any event. The OCC regulations require a SAR when a bank detects that an “insider” — such as a bank employee — has committed a federal crime against the bank, regardless of the amount involved.…
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We have a business customer that operates a gas station/convenience store. The customer cashes checks for its customers and is required to register as a money services business with FinCEN, which it has. Does this customer also need to register with the State of Illinois as a check casher? If so, where do I look to see if they are already registered?
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The principal law in Illinois regulating check cashing performed by non-financial institutions is the Illinois Currency Exchange Act (CEA). However, a money services business (MSB) is not automatically required to register as a currency exchange under the CEA. Based on your stated facts, we think it unlikely that this customer would be required to become…
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We have a customer that recently purchased a $28,000 cashier’s check with cash to pay the winner of a drawing. The customer also recently deposited $77,000 in cash proceeds from the drawing. How do we fill out the currency transaction report (CTR) to incorporate both transactions? On Item 21 of the CTR form, we are supposed to list the total “cash in” amount for the entity, where we included the $77,000 deposit. But where do we add the cashier’s check purchase? Do we add a line to Item 21? Also, should we create a Part I (Person Involved in Transaction) for our bank for the cashier’s check purchase, because our bank was involved in that currency transaction?
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In our view, the appropriate place to list the individual amounts of the deposit and the cash purchase of the cashier’s check is in Item 25 on the CTR. Item 25 is used to identify the amount and type of each individual “cash in” transaction, along with the total of all the “cash in” transactions.…