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Bank Secrecy Act. SCEFCU June 21, 2005. What is the Bank Secrecy Act?.
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Bank Secrecy Act SCEFCU June 21, 2005
What is the Bank Secrecy Act? • The Bank Secrecy Act is a combination of various statues that require credit unions to record, retain and report certain financial transactions to the Federal Government and was enacted to help in the investigation of money laundering, tax evasion, terrorist financing, and various other criminal activities.
What the Bank Secrecy Act is NOT! • It is not in place to protect the privacy of our members. (That is the Right to Financial Privacy Act.)
What are SCEFCU’s responsibilities under BSA? • Establish, implement, and diligently monitor the BSA policy • Report and maintain records for certain currency transactions and other transactions such as the sale of negotiable instruments and wire transfers • Report suspicious activity • Verify identity of members and maintain records of the method of verification • Screen members for OFAC compliance • Provide training for employees and volunteers
Who is our BSA Officer? • Primary • Jennifer Curran – Internal Auditor • Back-Up • Lilia Rojo – Director of Operations
Currency Transaction Report (CTR) • A CTR must be filed for all cash transactions in excess of $10,000 by the 15th calendar day after the day of the transaction. • We must verify and record the identity of the individual presenting the transaction as well as the information about the person or business for whom the transaction is being conducted. • This includes multiple transactions on the same business day.
Monetary Instruments Log (MIL) • The credit union will obtain and maintain information on sales of monetary instruments, sold for cash, in amounts from $3,000 to $10,000. • This includes multiple sales of monetary instruments in one day to the same member.
Suspicious Activity Report (SAR) • For any suspicious activity, immediately notify your supervisor or the BSA Officer. • The Credit Union is required to send a completed SAR to FinCEN whenever the Credit Union detects any known or suspected Federal criminal violation. • SARS ARE CONFIDENTIAL!! • DO NOT notify a member that we are filing a SAR.
Types of Suspicious Activities • Structuring transactions to avoid a CTR • Money Laundering • Counterfeit checks • Bribery • Counterfeit Credit/Debit Cards • Misuse of Position • Check fraud • Counterfeit instrument • Computer intrusion
Types of Suspicious Activities • Terrorist financing • Mortgage loan fraud • Check kiting • Credit Card fraud • Mysterious disappearance • Commercial loan fraud • Wire Transfer fraud • Consumer loan fraud • Embezzlement
When to File a SAR • A SAR will be filed within 30 days of the initial detection for: • Suspicious transactions aggregating as follows: • $5,000 is suspect is known • $25,000 if no suspect is identified • No dollar limit for transactions involving insiders… this means YOU! • The BSA Officer will file the SAR.
Exchanges of currency Structured withdrawals or deposits of currency over several days within the same week or transactions at different branches Characteristics of Money Laundering
Frequent or uncharacteristic purchases or cashing of monetary instruments for cash Frequent or uncharacteristic wire transfers Characteristics of Money Laundering
Transactions that exceed the member’s normal cash deposit or withdrawal activity by 50% or more Any suspected Money Laundering must be reported to the BSA Officer for further investigation and SAR filing. Characteristics of Money Laundering
International Transportation of Currency or Monetary Instruments Report • This report is filed whenever a person physically transports, mails, or ships more than $10,000 in currency or monetary instruments into or out of the U.S.
Office of Foreign Assets Control (OFAC) • What is OFAC? • An agency of the Treasury Department that imposes economic sanctions against hostile countries, entities, and individuals. We cannot do transactions for anyone who falls under OFAC restrictions.
OFAC Requirements • To abide by the regulations and requirements administered by OFAC, the Credit Union must do the following: • Maintain current OFAC lists • Properly complete and file OFAC forms • Verify new account holders and existing member activity against OFAC lists • Periodically verify existing account holders against OFAC lists • Train staff regarding their responsibilities under OFAC
How Do We Comply With OFAC? • For new members, we verify their information with ChexSystems upon opening the new account. The Credit Union will be notified if there is a match. • We perform periodic screenings of our existing member database through a program designed to detect matches to the current OFAC lists
How Do We Comply With OFAC? • Wire transfers, VIGO transfers, and ACH transactions are also checked against the OFAC lists. • If any search indicates a match, a freeze must be placed on the account or transaction and the BSA Officer must be contacted immediately.
Member Identification Policy (MIP) • SCEFCU’s Member Identification Policy is part of the USA PATRIOT Act, which aims to protect the U.S. financial system from money laundering and terrorist financing. The credit union will not establish a formal relationship with a potential member until we have formed a reasonable belief that we know the individual’s true identity.
MIP Requirements • SCEFCU’s Member Identification Policy meets the USA PATRIOT Act standards which, at a minimum, include the following requirements that must be obtained from each new member: • Name, • Date of birth • Physical (street) address • Identification number *
MIP Requirements • For U.S. persons a taxpayer identification number; for non-U.S. persons, a TIN, passport number and country, alien identification card number, or number and country of issuance of any other government-issued document with a photograph.
SCEFCU Additional Requirements • SCEFCU also requires additional sources of identification, which may include any non-expired government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard. • For U.S. persons: State-issued driver’s license or I.D. card, or U.S. passport • For non-U.S. persons: Passport, alien I.D. card, Matricula Consular or other non-expired government-issued identification.
SCEFCU Additional Requirements • SCEFCU may also use additional non-documentary resources to support the verification of a member’s identity, such as: • Credit reports • Other consumer reporting agencies • Public databases
MIP Requirements • In addition, we must: • Record a description of all documentation we relied on to verify the member’s identity, and retain it for 5 years after the account is closed; • Screen potential members against government-issued lists of known or suspected terrorists; • Provide a notice to members of our Member Identification Policy that they can view before opening an account.
All records related to maintaining BSA compliance will be retained for a period of no less than five years by the Credit Union. Record Retention
Violations of the BSA • Compliance to all Bank Secrecy Act requirements is a condition of employment at SCE FCU. • No employee, manager, officer, or volunteer of the Credit Union has authority to waive any BSA requirement. • There are strict penalties that may be enforced by the Department of the Treasury upon any violation of the BSA.
Violations of the BSA • In addition, all employees, managers, officers, and volunteers of SCEFCU can be held personally liable and assessed penalties for the participation in the violation. Ignorance of the law is not an acceptable excuse to avoid potential personal liability and willful acts of non-compliance are prosecuted as felonies!
