Testing and Reviews. Importance of BSA / AML Training Testing staff on their comprehension of the training

Transcription

1 Testing and Reviews

2 Testing and Reviews Importance of BSA / AML Training Testing staff on their comprehension of the training BSA AML Review Target Training to those who need it Know Your Employee Accountability for errors Assessing Risk

3 What is Tested and Reviewed Customer Identification Program Customer Due Diligence Program (CDD) OFAC Compliance Currency Transaction Reporting Negotiable Instrument Log Tracking Data Validity Suspicious Activity monitoring (by branch staff) Fraud monitoring (by branch staff)

4 Customer Identification Program CIP Test: The CIP is based on a review of customer identification that front line staff obtains per our banks CIP policy and procedure. The review analyzes the number of exceptions found in the review and is broken down into critical exceptions. Critical errors are missing Name, Physical Address, Date of Birth, and TIN (EIN, SSN, or ITIN etc.) CIP Assessment: is based on a review of customer identification that front line staff obtains per our banks CIP policy and procedure. The review tests the exceptions over 30 days to determine if the CIP items have been cleared. Items under 30 days are noted but not tested.

5 Customer Due Diligence Program (CDD) New Account / CDD Review: The New Account Customer Due Diligence Review completed by the BSA team and is based on a review of all new customers (CIS Records) opened for that month. New Accounts are reviewed to ensure proper CIP was gathered (Name, Physical Address, Date of Birth, and TIN (EIN, SSN, or ITIN etc.)) as well as an OFAC. New accounts are also reviewed to ensure the Customer Due Diligence information was gathered on a NEW customers.

6 Currency Transaction Reporting CTR Test: The CTR Test is based on a review of CTRs completed by branch staff. An assessment is done to show an error rate per branch.

7 Negotiable Instrument Log Tracking Negotiable Instruments Log Review: The NIL Review is a review of all Negotiable Items purchased with cash from $3, $10, which are logged by branch staff in the teller system. An assessment is done to show an error rate per branch. Errors would consist of not associating the purchase of the check with the customer (via account number), Incorrect ID gathered (Known and existing are NOT acceptable), Incorrect purchaser information etc.

8 Data Validity Teller Transaction Review: The Teller Transaction Review is a review of all the important (involving cash / monetary instruments) teller transactions that should be associated with a customer when processing through the teller system. An assessment is done to show an error rate per branch. Key transactions should be associated with the customer performing them such as cashier s check purchase, money order purchased, currency exchange, cash not on us check over $1, etc.

9 Suspicious Activity monitoring (by branch staff) Suspicious Activity Review: This Reviews the branches that have sent or not sent to the BSA Team in terms of BSA issues (Kiting, Structuring, etc.) Branches are not assessed by points for this review they are coached and trained when needed to point out key red flags missed. The bank is also assessed comparing number of cases to the number of law enforcement request to give the bank a rating on quality of SARs filed

10 Fraud monitoring (by branch staff) Fraud Review: This Reviews the branches that may have missed key red flags that may have assisted the bank in preventing / mitigating fraud loss. Branches are not assessed by points for this review they are coached and trained when needed to point out key red flags missed.

11 Customer Identification Total number of critical CIP Errors Total number of accounts opened for the month being reviewed Error rate for critical CIP Errors This review analyzes the number of exceptions found in the review and is broken down into critical exceptions. Critical errors are missing Name, Physical Address, Date of Birth, and TIN (EIN, SSN, or ITIN etc.) Total number of CIP Errors Error rate for total CIP Errors Point totals to help rate the branch on their performance on CIP compliance

12 CIP Assessment The New Account Customer Due Diligence Review This review tests the exceptions over 30 days to determine if the CIP items have been cleared. Items under 30 days are noted but not tested. Total number of CIP Errors Total number of accounts opened for the month being reviewed The New Account Customer Due Diligence Review completed by the BSA team and is based on a review of all new customers (CIS Records) opened for that month. Sample accounts are broken down by account type All errors for missing OFAC checks and Non-documentary checks are noted here Error rate on total errors Point totals to help rate the branch on their performance on new account checks

13 Customer Due Diligence Sample accounts are business accounts opened previous month Errors for missing / incorrect NAICS Codes for business accounts opened Total number of errors Error rate for CDD Errors The New Account Customer Due Diligence Review completed by the BSA team and is based on a review of all new customers (CIS Records) opened for that month. Total number of CDD Errors for new business accounts Total number of business accounts opened Point totals to help rate the branch on their performance on new business account checks

14 Currency Transaction Reporting The CTR Test is based on a review of CTRs completed by branch staff. An assessment is done to show an error rate per branch. Total number of CTR errors noted for the month Error rate for each branch Total number of CTRs for the month Point totals to help rate the branch on their performance on completing CTRs

15 Negotiable Instruments Log Review An assessment is done to show an error rate per branch. Errors would consist of not associating the purchase of the check with the customer (via account number), Incorrect ID gathered, Incorrect purchaser information etc. Total of MI sold for cash over $3, All errors noted in the gathering of information Point totals to help rate the branch on their performance on completing CTRs Comments if needed on the error that was made Error rate for each branch

16 Data Validity An assessment is done to show an error rate per branch. Key transactions should be associated with the customer performing them such as cashier s check purchase, money order purchased, currency exchange, cash not on us check over $1, etc.

17 Putting it all together Copying each of the points columns from each of the reviews Copying each of the points columns from each of the reviews Final Rating for the branch Total up the points by branch and divide that number by the number of reviews (seven for these examples) That will give you the rating for the branch All up all of the points from the reviews to get the total Divide the total points be the number of reviews List any action items that the branch will need to do to correct performance

18 Ratings for the branch and points

19 Know Your Employee (KYE) Accountability for errors When reviewing for errors by branch staff be sure to document who made the errors to track certain employees that need more training Assessing Risk Assess the risk of employees that may be overlooking certain regulations, use the opportunity to help coach them to understand the regulations Target Training for staff KYE gives the BSA Team the opportunity to give specialized training to areas of BSA that staff may need to be coached in further

20 Target Training for staff Gives the BSA Team the opportunity to give specialized training to areas of BSA that staff may need to be coached in further Know where your staff has trouble in understanding the Bank Secrecy Act Policy and if it may need to be enhanced

21 Effects of BSA Errors When reporting the errors to management it is important to point out certain factors What section of the BSA program is the error What is the exact BSA error What are the possible effects of the BSA errors on the Bank What can be done to resolve the errors going forward

22 Effects of BSA Errors

23 Effects of BSA Errors

24 Summary Assess the risk of your institution being used as a conduit to launder funds though Review and test key BSA / AML functions to determine how employees perform Document information from investigations Use analytics to look for patterns and trends of the branch staffs compliance with BSA / AML functions