2015 Bank Secrecy Act

Transcription

1 2015 Erin O Hern, Director of League Compliance Services The services of PolicyWorks and this presentation, including all materials, should not be construed as legal services, legal advice, or in any way establishing an attorney-client relationship. Credit unions should contact their own legal counsel for advice. Copyright 2015 by PolicyWorks. All rights reserved. These materials may not be reproduced in whole or in part, in any form whatsoever, without the express written consent of Erin O Hern and PolicyWorks. 1 Acronym OFAC BCTR SAR FinCEN CIP AML Reference Office of Foreign Asset Control Currency Transaction Report Suspicious Activity Report Financial Crimes Enforcement Network Customer Identification Program Anti-Money Laundering 2 What is the? How does the Credit Union Comply? Your Responsibility Penalties for Non-compliance Office of Foreign Asset Control (OFAC) 3 1

2 Laws requiring financial institutions to assist in detecting and preventing money laundering. Money Laundering Financial transaction that aims to conceal the identity, source, and destination of illegally obtained money Criminal Activity $$ Credit Union $$ Appears Legitimate 4 Help identify the source, volume and movement of currency and other monetary instruments Requires recordkeeping of financial transactions Allows law enforcement and regulatory agencies to pursue investigations and provide evidence for prosecutions Criminal Activity $$ Credit Union $$ Appears Legitimate 5 6 2

3 Qualified Designated by Board of Directors; Responsible for coordinating and monitoring day-today /AML Compliance; Knowledgeable of and related regulations; and Reports activity to the Board of Directors and Senior Management in order for them to make informed decisions 7 Effective Comprehensive Risk Assessment identifying credit union operations and related / AML / OFAC risks Implementation of compliance program including policies, procedures, and processes which identify high risk transactions and satisfy regulatory reporting requirements 8 Currency Transaction Report Currency Transaction Reports (BCTR) CASH transaction(s) exceeding $10,000 Deposit, Withdrawal, Exchange, Payment Completed BCTR must be electronically filed with FinCEN within 15 calendar days after the date of the transaction. Member KNOWS 9 3

4 Suspicious Activity Report Suspicious Activity Reports (SAR) Report filed to FinCEN identifying activity appearing to be suspicious or criminal ( structuring, insider abuse, credit / debit card fraud, identity theft, check fraud, loan fraud, computer intrusion.) Confidential 10 Compliance Report Completion & Filing Provide for dual controls and the segregation of duties to the extent possible. For example, employees that complete the reporting forms (such as SARs, CTRs, and CTR exemptions) generally should not also be responsible for the decision to file the reports or grant the exemptions. 11 Compliance Member Identification Program Member Identification Program KNOW who is opening an account Credit union needs policies / procedures Identify high risk accounts 12 4

5 Compliance Member Identification Program Business Accounts CU needs to obtain documentation for legal entity and all signers on a business account Verify legal existence of business entities Verify identity of agent opening account 13 Compliance Money Service Businesses FinCEN defines MSBs as doing business in one or more of the following capacities: Dealer in foreign exchange Check casher Issuer or seller of traveler s checks or money orders Money transmitter Provider of prepaid access 14 Compliance Annual / AML / OFAC Staff needs annual training that is tailored to the employees specific responsibilities Overview of during new employee orientation Expanded training for 15 5

6 FinCEN Advisories Advisory to U.S. Financial Institutions on Promoting a Culture of Compliance FIN-2014-A007.pdf Advisory to U.S. Financial Institutions on Human Trafficking Financial Red Flags ault/files/fin-2014-a008.pdf 16 Culture of Compliance Encourages Board of Directors and Senior Management to: Support and understand compliance efforts Ensure efforts to manage /compliance risks are not compromised by revenue concerns Relevant information is shared with compliance staff Adequate resources are provided 17 Human Trafficking Red Flags Identifying human trafficking and human smuggling transactions Money flows that do not follow common remittance patterns Unusual currency deposits into U.S. financial institutions, followed by wire transfers to countries with high migrant populations Incorporate red flags into monitoring and training program 18 6

7 Compliance Audit An independent audit of the credit unions compliance should be completed annually by qualified independent party. The Board should ensure any audit findings are promptly addressed. 19 Importance of Small Credit Union Compliance North Dade Community FCU (November 25, 2014) Assets - $4 Million / 5 Employees $300,000 Civil Money Penalty Assessed Failed to review 314(a) lists, lacked proper internal controls, independent testing, and training as well as did not have designated 20 Penalties Standard negligence: $500 Pattern of negligence: up to $50,000 $10,000 per day for CTRs not filed within 15 days If international money laundering is evident, penalties of up to $1,000,000 Intentional noncompliance: up to $100,000 in civil penalties can be levied against individual employees and board members 21 7

8 Penalties (continued) Criminal penalties for willful noncompliance: $500,000 and up to 10 years in prison, levied against individual employees and board members Bad publicity is important. Credit unions should stay informed to ensure compliance. 22 Office of Foreign Asset Control Office of the U.S. Treasury that administers and enforces economic and trade sanctions Requires credit unions to comply by verifying members / non-members against publically available lists Credit unions must block or reject assets which could be of threat to the United States 23 Board of Director Responsibility Review and update policies annually Ensure staff is checking members against the OFAC list (manual / data processor) New members prior to account transaction Periodically all members, as updates released How is the verification documented? Complete an audit & follow-up on findings Risk Assessment 24 8

9 Thank you! 1500 NW 118 th Street Des Moines, IA The services of PolicyWorks and this presentation should not be construed as legal services, legal advice, or in anyway establishing an attorney-client relationship. 25 9