Bank Secrecy Act OFAC FinCEN

Transcription

1 Bank Secrecy Act OFAC FinCEN SOUTHEAST DIRECTORS AND SUPERVISORY COMMITTEE CONFERENCE SEPTEMBER 18, 2017

2 Financial Crimes Identify Track Report

3 Common BSA Acronyms CIP CDD CTR SAR FinCEN OFAC Customer Identification Program Customer Due Diligence Currency Transaction Report Suspicious Activity Report Financial Crimes Enforcement Network Office of Foreign Assets Control

4 Enforces the Bank Secrecy Act

5 Culture of Compliance Everyone plays a role It s a Team Effort BSA Policy and Risk Assessment is the Foundation Outlines the BSA compliance program requirement Assists with establishing procedures Enforcement orders relate to the failure of documenting or implementing the written BSA compliance program

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7 HIDTA In Southeast

8 Required BSA Elements BSA Officer Board Approved Independent Testing Volunteers and Staff

9 FinCEN adds 5 th Pillar Customer Due Diligence

10 Beneficial Owners & Legal Entities INCLUDES: Corporations Limited Liability Companies General Partnerships DOES NOT INCLUDE: Sole Proprietorships Unincorporated Associations

11 Risk-Based Procedures Begin At Account Opening Understand nature & purpose Conduct ongoing monitoring to identify suspicious transactions Maintain & update member information

12 High Risk Member Reports to Review Funds Transfer Reports Large Item Reports Monetary Instruments NSF/Kiting Reports Significant Change in Balance Loan Missing 1 st or 2 nd Payment Paid off Quickly with Cash CDs Cashed Early

13 OFAC Compliance New Accounts Joint Owners Beneficiaries 3 rd Party Wires All members on a regular basis International ACH Transactions

14 FinCEN Update: Treasury Acts to Increase Economic Pressure on North Korea and Protect the U.S. Financial System June 29, 2017

15 CTR Currency Transaction Report $10,000+ Cash Deposits Withdrawals Cash Exchanges 15 Days to File Joint Owners

16 Suspicious Activity Report Thresholds Financial Institutions are required to file a SAR for: Criminal violation involving insider abuse for any amount Criminal violations aggregating $5,000 or more when a suspect can be identified Criminal violation aggregating $25,000 or more when suspect is unknown

17 Suspicious Activity Reports BSA VIOLATIONS ILLEGAL ACTIVITIES MEMBER IS A VICTIM Money Laundering Structuring Source of Funds Fraud Kiting Counterfeit Instruments Scams Identity Theft Elder Abuse

18 Individuals Credit Union Penalties for Disclosing a SAR Civil maximum $100,000 Criminal max $250,000 and/or five years in prison $25,000 per day for each day the violation continues

19 SAR Growth Over 4 Years at Financial Institutions 35, , % Increase

20 SAR Reminders Report to Board File within 30 days of suspicious activity. Re-file every 90 days Support documentation 5 years Member considered high risk monitor account for 90 days

21 Contact Law Enforcement if SAR activity continues

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23 Texas Woman Sentenced for Structuring Financial Transactions Former Credit Union Manager Sentenced for Embezzlement

24 Tax Refund Fraud Don t Forget to File SAR Multiple direct deposit (ACH) refunds going to one account One individual with multiple parties to negotiate tax refund checks Individual trying to negotiate double endorsed refunds with questionable identification Account opened on behalf of member not present, with joint having signatory authority (elder, minors, prisoners, disabled or recently deceased)

25 2017 Supervisory Priority Focus for NCUA Debt Collection Imposter Scams Identity Theft Prizes and Lotteries Shop at Home Auto-related

26 Money Mule Operations are Increasing

27 Suspicious

28 Has anyone NOT received a spam text, or call in the last week? 27 million Americans lost approximately $7.4 billion to telephone scams alone 15.8 spam calls and 6.3 spam texts messages received in an average month TrueCaller, 2015 Survey

29 The Targets Technology Phone, , text, online banking, websites, mobile, social media Credit Union Obtaining data through weakest links authentication, employees & member Transactions New accounts, wires, checks, cards, loans Members Romance, work from home, lottery prize winner Fraudsters are crafty. Their innovative, multichannel approach pressures targeted victims to make important decisions on the spot. Always looking for victims who find the fraudster s schemes and stories convincing.

30 Phishing Attacks are Increasing Attempt to acquire information by masquerading as a trustworthy entity Recipients are enticed to click on an imbedded link or open an attachment Typically distributes malware User names, passwords, credit/debit card details Captures banking login info and transfers funds out of account

31 Dear credit union member, There has been an error on the credit union server and your Internet login details have been lost. As a result, you have no access to Internet banking. More importantly your account is no longer secure. Please click on the link below and follow the instructions to restore access. You will be asked to provide your Internet bank details. TrustMe Federal Credit Union

32 You Have a Secret Bank Account Here s how to Use It Every American has a secret account at the Federal Reserve Bank Instruct naïve consumers how to pay their bills, using routing numbers, account number Report any incidences to RTN.fraud@ny.frb.org

33 Identity Theft Heats Up $16 billion was stolen from 15.4 million American victims in 2016 DARK WEB Black Market $12 - $15 for Track I and II credit card information $30 for complete identity packages 6% of an account balance for online banking credentials Javelin Strategy & Research

34 Fraud Awareness Document I am requesting to withdraw by cash, official check or wire transfer $xx,xxx for the purpose of:. I have been advised by the credit union that the purpose of this transaction may be for fraudulent or suspicious activity. I have been informed of the possible scam and wish to proceed with the withdrawal knowing that I may not be able to recover the funds, if I proceed with the transaction. Member Signature Date Employee Witness

35 Elder Financial Abuse Fastest Growing Crime of the 21 st Century - $36 Billion Taking money or property Using coercion to sign legal documents Using property or possessions without permission Confidence games

36 15% Healthcare Aides 68% 17% Friends and Neighbors Family Members

37 Typical Victim of Elder Abuse Female Age Frail Cognitively Impaired Federal Reserve Consumer Compliance Outlook Newsletter

38 Cyber crime involves a computer and a network. FinCEN further defines a cyberenabled crime as illegal activities, such as fraud, money laundering, or identity theft, carried out by electronic systems and devices.

39 Cybercriminals cost the global economy $454 billion. Every evil Internet minute, malicious activity cost international commerce $858,153 and victimizes 1,080 people Source: RiskIQ July 2017

40 Internal Testing outside of your BSA Audit Issues noted in the last exam have they been addressed? Has FinCEN communicated with your credit union regarding SARS? Were account ID verification and OFAC completed on new members? Were SARs filed when suspicious activity was reported? If no SAR filed, was the decision making process followed? Were FinCEN 314(a) searches conducted every two weeks? Were large currency transactions referred for investigation? Are reports being reviewed?

41 10 Most Common Audit Findings Properly identifying MSB RSSD numbers are missing from CTRs and SARs Relying on 3 rd parties to conduct OFAC checks Policy refers to procedures that don t exist No procedure to identify when a member is no longer high risk Annual BSA training not completed OFAC checks not documented FinCEN 314(a) not being reviewed SARs not reported to Board BSA Policies not reviewed and approved by the board annually

42 Preparing and Passing a BSA Exam Risk Assessment is the Foundation Members, products and services, geographic area High Intensity Drug Trafficking Areas Review at least every 18 months or when new products are added BSA Compliance Program Policies and procedures reviewed and approved by the board annually Document approval in the board minutes

43 Board of Directors Credit Union Staff Supervisory Comm Approve policies Appoint BSA Officer Receive SAR Report Review BSA Audit Update policies & risk assessment File BSA reports Monitor accounts Schedule training Schedule BSA audit Follow up on action items Ensure action items corrected

44 Cheryl Oggs, BSACS Vice President Mississippi Credit Union Association ext Direct