Agent Compliance Manual. For Caribbean Airmail, Inc. Bank Secrecy Act Anti Money Laundering OFAC USA PATRIOT ACT CFPB July 2014

Transcription

1 Agent Compliance Manual For Caribbean Airmail, Inc. Bank Secrecy Act Anti Money Laundering OFAC USA PATRIOT ACT CFPB July 2014 May Not Be Used Or Disclosed Outside Caribbean Airmail Inc Without Management Approval 1

2 Table of Contents Agent Compliance Manual Chapter 1. BSA / AML Program... 4 Section 1.1. Introduction... 4 Section 1.2. BSA Officer... 5 Section 1.3. Written Compliance Program... 5 Section BSA / AML Training Procedures... 5 Section 1.4. Periodic Independent Review... 8 Section 1.5. Disciplinary Action... 8 Section 1.6. Money Laundering... 8 Section 1.7. Terrorist Financing... 9 Section AML Reports... 9 Section 1.8. Identity Verification Procedures... 9 Section Verification Through Documents Section Lack of Verification Section 1.9. Caribbean Airmail, Inc Procedures Section Know Your Customer (KYC) Guide Section Watch List Section Payment Cancellation Procedures Chapter 2. Office of Foreign Assets Control List (OFAC) Section 2.1. Background Section 2.2. Policy Section 2.3. Responsibility for OFAC Section 2.4. Procedures for OFAC Compliance Chapter 3. Politically Exposed Persons (PEPs) Chapter 4. Currency Transaction Reports (CTRs) Section 4.1. Caribbean Airmail, Inc. Expectations Section 4.2. Structuring Section 4.3. Responsibility for Completion of CTRs Section 4.4. Verification Requirements Section 4.5. Method of Verification Section 4.6. Unavailable or Unacceptable Identification Section 4.7. Accuracy of CTRs Section 4.8. Centralized Review and Filing of CTRs Chapter 5. Suspicious Activity Reporting Section 5.1. Overview of Suspicious Activity Reporting Section 5.2. Thresholds of Reportable Activity Section 5.3. Timeline for Referring Suspicious Activity and Filing SARs Section 5.4. SAR Filing on Continuing Activity Section 5.5. The SAR Procedure Section 5.6. Safe Harbor Chapter 6. Policy on Agents Section Disciplinary Action Section Terminating an Agency Agreement Chapter 7. BSA AML Independent Review Chapter 8.Compliance Examination and Legal Requests Section 8.1. IRS and State Compliance Examination Procedures May Not Be Used Or Disclosed Outside Caribbean Airmail Inc Without Management Approval 2

3 Section Procedures for Law Enforcement request Section 8.2. Privacy Policy Chapter 9. BSA Record Retention Chapter 10. Consumer Financial Protection Bureau (CFPB) Section Disclosure Procedures Section Error Resolution Procedures Section Cancelation Notice Procedures Section Consumer Complaints Procedures May Not Be Used Or Disclosed Outside Caribbean Airmail Inc Without Management Approval 3

4 Chapter 1. BSA / AML Program Money services businesses (MSBs) may unknowingly be used to launder money derived from criminal activity. The intention behind these types of transactions is to hide ownership of the funds and associated activities from the government. Our company will make every effort to resist being associated with money laundering or any other type of criminal activity. Any CAM Agent s employee who knowingly and willfully launders money, or attempts or assists someone in laundering money, is subject to substantial fines or imprisonment or both. Also, in accordance with the Bank Secrecy Act (BSA), any CAM Agent employee who willfully structures a transaction, or attempts or assists someone in structuring a transaction, to avoid the currency reporting requirements of BSA is subject to substantial fines or imprisonment or both. CAM Agents employees are prohibited from engaging in money laundering and/or transaction structuring and are required to report immediately all attempts to launder money, structure a transaction and/or all suspicious activities. All the employees are required to adhere to the policies within this compliance document. Section 1.1. Introduction The Financial Recordkeeping and Reporting of Currency and Foreign Transactions Act of 1970 (31 U.S.C 5311 et seq.) is referred to as The Bank Secrecy Act (BSA). The Bank Secrecy Act imposes a duty on financial institutions, which includes this business as an MSB, to identify and report potential money-laundering activities, terrorist financing, illegal activities, and certain other suspicious transactions conducted by or through the business, and also to make and retain certain records regarding customers, transactions and accounts. Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs) are the primary means used by financial institutions to satisfy the requirements of the BSA. The BSA also requires records be maintained sufficient to enable transactions and activity in customer accounts to be reconstructed if necessary; such records are very useful in any subsequent criminal, tax or regulatory investigations or proceedings. The BSA was originally intended to aid in the investigation of criminal investigations, e.g. income tax evasion and money laundering. A number of acts and regulations have been added over the years to expand and strengthen the scope and enforcement of the BSA, implement more stringent anti-money laundering (AML) measures, and counter terrorism. These acts place responsibilities upon the business such as: Performing specific Customer Identification Procedures and Office of Foreign Assets Control (OFAC) list checks prior to completing transactions; Identifying customers and evaluating the risk of performing transactions for them; Being alert for suspicious, unusual or unexpected activity, investigating such activity and filing SAR-MSBs with the United States Department of the Treasury s Financial Crimes Enforcement Network (FinCEN) when appropriate. Filing reports of large currency transactions (CTRs) with the Internal Revenue Service (IRS). 4

5 All Agents subject to these regulations are required to implement and closely adhere to written BSA/AML policies and procedures approved by the Board of Directors of the Licensee. Section 1.2. Compliance Officer The Agents need to designate a Compliance Officer. This individual is responsible for the administration of the Agents Compliance Program. The Officer is responsible for ensuring all new employees and directors receive initial BSA training, and the Officer will arrange or conduct BSA training for all employees and directors on a periodic basis, tailored in each case to the individual s position and responsibilities within the business. The Compliance Officer will ensure that all required reports are filed timely and accurately and will ensure appropriate ongoing independent review. Section 1.3. Written Compliance Program Compliance Reviews: CAM Agents shall conduct an independent external audit of the company s compliance program. The audit must: 1. Assess the overall integrity and effectiveness of the company s systems and controls in place as well as the BSA s technical compliance. 2. Assess management s, and staff knowledge of the company s anti-money laundering regulations and procedures. 3. Review the personnel s knowledge of current compliance issues, company s internal controls, identifies compliance deficiencies. Training and Testing of BSA and Anti-money Laundering Knowledge: 1. Certification of Trainers: Only CAM delegates recognized as possessing the requisite knowledge and expertise will be used to train Agents Compliance Officer. 2. Employee training: Agents employees shall be trained in compliance initially when hired, and subsequently as their job duties require. Filling of Reports: The Compliance Officer shall contact Compliance Department in order to file with the proper authorities all reports required by law or regulation. Compliance with all applicable laws and regulations intended to prevent money laundering is paramount for CAM Agents. This Program serves as testimony of CAM s commitment and guidance as to the comportment of its Agents personnel concerning BSA requirements. The Program represents only the first step. CAM recognizes that compliance is an on-going process requiring the full cooperation of all members of its Agents. Part BSA/AML Training Procedures The company sets forth a rule herewith determining that no CAM Agents employee can begin working without proper Anti-Money Laundering training and signing an AML Training Acknowledgement Form. In the same format no Agent can start operating and transmitting funds without prior BSA/AML training and signing the BSA/AML Training Acknowledgement Form. 5

6 CAM s Compliance Officer and Compliance Delegates shall conduct BSA/AML trainings and shall test and evaluate appropriate agents employees in all aspects of the regulatory requirements of the BSA and CAM s internal BSA compliance and anti-money laundering policies and procedures. The training program shall ensure that: All CAM Agents personnel who have contact with customers (whether in person or by phone), who see customer transaction activity, or who handle cash in any way, receive appropriate training. Training is ongoing and incorporates current developments and changes to the BSA, anti-money laundering laws and FinCEN regulations. CFPB Remittance Rule. New and different money laundering schemes involving customers and money transmitters are addressed. Training includes examples of money laundering schemes and cases, tailored to operations of the employees and agents in attendance, and the ways such activities can be detected or resolved. Training focuses on the consequences of an employee s failure to comply with established policy procedures (e.g. fines, termination, and incarceration). Company has developed an ongoing training program for its agents under the leadership of the BSA Compliance Officer. The training program addresses, but not limit to: how to identify red flags and signs of money laundering that arise during the course of agents operations; what to do once the risk is identified; what the agents' roles are and the consequences of non-compliance with the U.S. PATRIOT Act (including civil and criminal penalties). Training will be performed on a regular basis and on as needed basis. No Agent may start operations without proper BSA/AML training and approved by the Compliance Department. Company s training procedures / Guidance: A) Initial Training 1. Compliance Delegate shall have a confirmed appointment with the attendees. Reconfirm the time and date with a phone call the day before the training date. 2. Bring all necessary material. 3. Always be on time. If you have any delay, call to inform the Agent. 4. Begin the Training: a) Speaker s Opening remarks must include that the training covers the BSA/AML (Bank Secrecy Act and Anti Money Laundering) requirements and regulations. b) Notes: The regulations and requirements from the US Government Regulatory Agencies which are implemented by CAM and shall be revered by the Agents. The BSA also imposes criminal and civil penalties. c) Training Main Topics: 6

7 In addition to covering duties such as large cash transaction reporting (CTR), suspicious activity reporting (SAR), customer identification, and record keeping, trainings should emphasize: The meaning of money laundering and examples of how financial institutions are used for laundering money The reasons why it poses a major institutional and individual risk The institution s Know Your Customer (KYC) program and suspicious activity detection and reporting. The anti-money laundering training program, explaining the compliance program s goals and its consequences towards the institution, the agents and customers. d) Demonstrate: The procedures for transfers over $3, and $10, including fees Completion of ATF (Authorized Transaction Form) and have participants complete examples using different scenarios. Completion of CTR forms (Cash Transaction Report) and have designated Compliance Officer complete examples using different scenarios. Completion of SAR forms (Suspicious Activity Report) and have Designated Compliance Officer complete examples using different scenarios. e) Ensure that the trainee knows that it is required to file SARs and CTRs electronically. f) At the end of the training, Agent must take a test and score 70 to pass. B) Refresher Training The Agent receives the BSA/AML Program and all the training documents electronically in MT Agents system, SARs, CTRs forms, and Quiz. A deadline is intended to have the agent take the Quiz. The Agent needs to score 70 to pass. 5. Proof of Receipt and Acknowledgment Retrieve from the agent a signed Training Documents Check List which includes the following documents: a. Agent Compliance Manual Receipt b. Operation Manual Receipt c. Site Audit Visit d. Authorized Transaction Form e. CTR Form f. SAR Form g. Compliance Training Acknowledgement h. Compliance Training Check List i. Contact to Get Release Code 7

8 j. Release Code Procedure k. Designation of Agent Compliance Officer form l. Certification of Adoption of Compliance Program Form 6. CFPB Rule Make the agents aware of the CFPB requirements and comply with the requirements, such as disclosures, cancelations, and refund and error resolution rights. Section 1.4. Periodic Independent Review The Bank Secrecy Act requires that an independent and comprehensive review of the MSB s BSA compliance be performed periodically. While the BSA does not specifically state a timeframe, higher risk entities may perform annually or more frequently and lower risk entities less frequently. Regulatory expectations are that the review be completed no less frequently than every 18 months; banks typically require money transmitters to obtain review annually. CAM suggest that all the Agents have the independent review conducted on an approximately annual basis (and no more than 18 months) by a person other than the Compliance Officer. The report also shall address steps taken to remedy any deficiencies previously cited in regulatory examinations. The Compliance Officer is responsible for promptly addressing any compliance deficiencies, documenting the corrective actions taken. Copies of the Independent Review and of the Compliance Officer s response to any findings may be shared with the BSA Officer of the bank(s) used by the business and the Compliance Officer of CAM. Section 1.5. Disciplinary Action In recognition of the seriousness of non-compliance, the Company will impose appropriate disciplinary action against any agent who violates the Program. Disciplinary action shall be applied consistently on a fair and equitable basis to all levels of agents. Section 1.6. Money Laundering Money laundering is the criminal practice of processing ill-gotten gains, or dirty money, through a series of transactions; in this way the funds are cleaned so that they appear to be proceeds from legal activities. Money laundering generally does not involve currency at every stage of the laundering process. Although money laundering is a diverse and often complex process, it basically involves three independent steps that can occur simultaneously: Placement The first and most vulnerable stage of laundering money is placement. The goal is to introduce the unlawful proceeds into the financial system without attracting the attention of financial institutions or law enforcement. Placement techniques include structuring currency in amounts to evade reporting requirements. An example may include: dividing large amounts of currency into less-conspicuous smaller sums. 8

9 Layering The second stage of the money laundering process is layering; this is the process of separating the proceeds of illegal activities from their origins through the use of layers of financial transactions. This process involves moving funds around the financial system, often in a complex series of transactions to create confusion and complicate the paper trail. Examples of layering include exchanging monetary instruments for larger or smaller amounts, or wiring or transferring funds to and through numerous accounts in one or more financial institutions. Integration The ultimate goal of the money laundering process is integration. Once the funds are in the financial system and insulated through the layering stage, the integration stage is used to create the appearance of legality through additional transactions. These transactions further shield the criminal from a recorded connection to the funds by providing a plausible explanation for the source of the funds. Examples include the purchase and resale of real estate; investment securities; foreign trusts; sham loans or forged or false import/export documents; or other assets. Section 1.7. Terrorist Financing The motivation behind terrorist financing is ideological as opposed to profit-seeking, which is generally the motivation for most crimes associated with money laundering. Terrorism is intended to intimidate a population or to compel a government or an international organization to do or abstain from doing any specific act through the threat of violence. An effective financial infrastructure is critical to terrorist operations. Terrorist groups develop sources of funding that are relatively mobile to ensure that funds can be used to obtain material and other logistical items needed to commit terrorist acts. Thus, money laundering is often a vital component of terrorist financing. Although the motivation differs between traditional money launderers and terrorist financiers, the actual methods used to fund terrorist operations can be the same as or similar to those methods used by other criminals that launder funds. Part AML Reports The Compliance Officer will analyze specific reports to detect any possible structuring or suspicious activity. These reports will also aide the Compliance Officer in confirming that the documentation required for transactions of $3,000 and over, and $10,000 if currency transaction, are on file. These reports will be maintained for a period of 5 years. Section 1.8. Identity Verification Procedures Caribbean Airmail, Inc must develop risk-based procedures for verifying the identity of each customer to the extent reasonable and practicable. The procedures must enable the business to form a reasonable belief that the business knows the true identity of each customer. The 9

10 procedures must be based on the MSB s assessment of the relevant risks, including those presented by the various types of services provided, the various types of identifying information available, and the MSB s size, location, and customer base. Part Verification Through Documents The business may use the following documents to verify identity of the customer: For an individual, an un-expired government-issued identification evidencing nationality or residence and bearing a photograph or similar safeguard, such as a driver s license, identification card, military ID card, passport, valid Alien Registration card, and valid Employment Authorization card. The business should establish procedures to address the following situations: An individual is unable to present an unexpired government-issued identification document that bears a photograph or similar safeguard; The business is unfamiliar with the documents presented; Part Lack of Verification The CIP (Customer Identification Program) regulation, a program that CAM implement as part of its compliance regimen, requires the business to establish procedures to respond to circumstances in which the business cannot form a reasonable belief that it knows the true identity of a customer. These procedures should describe: When the business should not complete a transaction; and When the business should file a Suspicious Activity Report in accordance with applicable laws and regulations. Section 1.9. Caribbean Airmail, Inc Procedures Knowing a customer involves more than just having seen that person conduct transactions through CAM. CAM must be able to match the customer to the transaction. CAM must find a fit between the two. Where satisfactory identification is required to be recorded, CAM should request documents sufficient to (a) identify the customer and (b) verify the customer s address. To identify the customer CAM should obtain a driver s license with a photograph, a U.S. passport, or alien registration card, or a foreign passport. Secondary documentation may include college or school ID card, a major credit card (verify the current status) and an employer ID card. To verify the address CAM may require a valid driver s license, and a current utility bill or some other official (contemporaneous) mail bearing the customer s address. To determine the appropriateness of the transaction, CAM should: Consider the proximity of the customer s residence or business to the address of the branch or agent. If the address seems inconvenient, CAM should inquire why such a branch or address is being used. 10

11 Call the business or home phone number provided by the customer to verify accuracy. If a mobile phone or pager number is provided, CAM must inquire further why no stationary phone is given. Under regulations promulgated by FinCEN pursuant to the BSA, all transactions of $3,000 or more in one day, or in a relatively short period of time, necessitate CAM to record and maintain identifying information about the remitter. Although fewer details are required, CAM must also record certain information for transactions under $3,000. For all transactions, CAM must record: Full name of the sender Telephone number of sender Full name of receiver Telephone number of receiver Receiver s bank account number and name on the account, bank name and branch, if funds are to be deposited into account The date the transaction was initiated and effected For transactions involving $3,000 and over including fees, CAM shall record: The date of birth of the sender Copy of Sender s Valid identification (State driver s license with photo, ID issued by DMV, U.S. alien registration card, Passport (and issuing country if non-u.s. passport), certificate of citizenship, military s card issued by branch of the Armed Forces Social Security Number ( SSN ) Last 4 digits. Employment Information And for transactions involving $10,000 including fees and above, CAM shall record one or more additional documents such as: Source of Funds (Bank Statement, Pay Stub, W2-Form, Bank Withdrawal(s)) If the transaction is to be performed by a Sectiony on behalf of someone else, the information of both Sectionies must be obtained, recorded and maintained by CAM. The company s software requires entry of such data fields prior to completing a transaction. Efforts will be made to identify any suspicious activity based upon the knowledge of the customer and transaction activity with appropriate SAR filing as necessary. Procedures for large transactions: A- Before completing a transaction of $3,000 or more, the employee must: 1. Obtain and record the required information from the customer. Customer full name Customer Date of Birth Recorded address, City and State Identification Number Identification issued and expiration 11

12 Occupation Social Security Number (Last 4 digits) 2. Review customer s identification document. The ID must: Be current and not expired Be Government issued Contain a photograph Contain customer s full name Contain customer s address (If PO BOX, obtain a physical address) 3. Determine that the form of identification is acceptable, such as: Driver License Passport Alien I.D. State-issued I.D. Military I.D. 4. Verify customer identity by comparing customer to identification document. 5. If the circumstances require it, confirm source of funds (employment, bank statements, etc.). 6. Fill out, sign and fax the Bank Deposit Transaction Form and Paid Interstate Transfer Form when applicable. 7. Fill out the form electronically in the system and fax other documents requested to CAM Compliance Department for authorization. B- Before completing a transaction for over $10,000 including fees, the employee must: Follow the same above procedure regarding $3,000 transaction In addition, the employee or the manager shall: o Complete a draft CTR to be faxed to the Compliance Department. o Complete the Section E of the Authorization Transaction Form to be faxed to the Compliance Department. o Confirm source of funds (employment, bank statements or cash withdraw receipt, bill of sale, etc.). The Agent Compliance Officer will review the draft CTR, keep a copy in his/her records and fax or deliver a copy to (CAM-HQ Compliance Department). The Compliance Department will prepare the final CTR to be forwarded to FinCEN and shall keep a copy of all supporting documents on file. Section Know Your Customer (KYC) Guide To better analyze large and irregular transactions, CAM s Know Your Customer program relies on the information related to the Compliance Department by the agent or the investigative reports, such as the customer occupation, the patterns of the transfers, the place of employment or other pertinent information retrieved from the customer. 12

13 Weekly, monthly and annual transaction analysis reports are reviewed on a regular basis. To avoid altercations with the customers, the Compliance Department will contact the agent to advise that upon the next transfer, proof of source of funds is a mandatory request from the Compliance Department, which respect to the laws of confidentiality, in order to approve the release of the customer s next transaction. The Watch List is updated and any investigated transaction is monitored. A discovery of structured transactions shall prompt a completion of a SAR. Any transfer originating from individuals that are knowingly conducting illegal Money Services Business will be immediately rejected. Requested documents for source of funds may include but not limited to: Section Account Statement Bank receipt Sales contract Salary Stub Watch List A customer name is recorded in CAM Watch List if he/she shows any suspicious behavior or unusual activities. The reason will indicate what action to take and how long the name will remain in the list. For example: 1. A sender or a beneficiary will be placed in CAM watch list if he/she conducts unusual transactions in one or more CAM locations. This way, any new transaction conducted by this sender will be held within the system until proper identification is provided. 2. Once a SAR is filed the sender or/and the beneficiary will be placed in CAM s Watch List. 3. When applicable, the list is updated by entering a new action status or result based on the information received by the Compliance Department. Section Payment Cancellation Procedures The company may cancel a transaction for two reasons: a) upon customer s request b) by decision of the Compliance Department. Compliance Department will review transaction and customer to identify potential suspicious activity. Customer needs to request the cancelation at the agent location. Agent must notify CAM by phone. The Customer Service in agreement with the Compliance Department will verify if the transaction is already paid via the foreign correspondent web site system. If the payment order is outstanding (not pay yet), the Compliance Department (a designee) will go to the CAM s system, release the transaction. In the meantime, a Customer Service Representative will proceed to the cancelation and the reimbursement of the transaction if applicable and add a notation of the reason of the cancelation. 13

14 Chapter 2. Office of Foreign Assets Control List (OFAC) Section 2.1. Background The U.S. Treasury Department s Office of Foreign Asset Controls ( OFAC ) issues regulations pursuant to a series of laws that authorize economic sanctions against hostile targets. These targets include countries deemed to be hostile to the interests of the United States ( target countries ) and those individuals and entities listed on the Treasury Department s Specially Designated Nationals and Blocked Persons list. Financial institutions, including the business, are prohibited from engaging in any transaction, in violation of the OFAC regulations, involving target countries or individuals or entities listed on the Specially Designated Nationals and Blocked Persons list. Section 2.2. Policy Caribbean Airmail, Inc will abide by the regulations issued by the Office of Foreign Asset Control by refusing to facilitate funds transfers by any individuals or entities as defined by the Office of the Treasury or OFAC. Caribbean Airmail, Inc is supportive of any initiatives that would aid in the sharing of information concerning persons that support, or otherwise associate with foreign terrorists and will provide financial information to federal authorities as necessary to enable the United States to combat the financing of terrorism, and/or lead to arrest of individuals who participated in the terrorist attacks against the United States on September 11, OFAC checking will be performed prior completing any money transfer transactions; the OFAC check for these transactions is performed through our money transfer software checking every sender and beneficiary. Section 2.3. Responsibility for OFAC CAM BSA Officer will serve as a point person for regulators and, because of the sensitive nature of any investigations that may be required, will exercise appropriate discretion. Responsibilities include: Establishment of monitoring systems. OFAC checking is performed for money transfer and is integrated into the company s automated system. Training of personnel as required. Such training will be conducted annually. Tracking and reporting of suspicious activity. Section 2.4. Procedures for OFAC Compliance The recommendation of OFAC states foremost that all MSBs cannot ignore their OFAC compliance responsibilities. To circumvent the available means for criminals to move money and threatens U.S. national security, CAM s MT AGENT system software provides the adequate screening to detect and hold a transaction which contains fields that are matching with the OFAC s Specially Designated National or Blocked Person (SDN) list. Inevitably, records of 14

15 false positives are not unusual. It is illegal to facilitate a money transfer to or on behalf of an SDN, regardless of the amount of the transfer. OFAC, with the help of the SDN list, is empowered by the President to administer and enforce the U.S. government s actions programs. alerts from OFAC are received in the Compliance Department and the proper update of the electronic SDN list is triggered within the MT AGENT system every two (2) hours. The following procedure is to determine or detect an exact match or good hit against the SDN OFAC list or Canadian Consolidated List (OSFI): 1. Upon accessing the held transaction within the system, immediately compare the name of the individual or entity on your transaction against the name on the OFAC list. - Is the name on the OFAC list a vessel or a company rather than an individual (or vice- versa)? - Is the name on the OFAC lists a male s name whereas the person on your payment instructions is a female? If yes to either question, you do not have a valid match. If no, please continue to Step 2 below. 2. How much of the OFAC s name is matching against the name on your transaction? - Is only one of two or more names matching (i.e., just the last name or just the first name)? If yes, you-do not have a valid match. If no, please continue to Step 3 below. 3. Compare the complete OFAC entry with all of the information you have on the matching name on your transaction. An OFAC entry often will have, for example, a full name, address, nationality, passport, tax ID, place of birth, date of birth, former names and aliases. -Is the country and/or the city on the OFAC list are the same on the transaction? If no, you do not have a valid match If yes, please continue to step 4 below 4. Compare the remaining information of the OFAC list with the one in the transaction. - Are you missing a lot of this information for the name on your transaction? If yes, go back and get more information and then compare your complete information against the OFAC entry. If no, please continue to Step 5 below. 5. Are there important similarities or exact matches between the information provided by the remitter and OFAC s entry? If yes, the Compliance Officer shall call the Hotline at If no, you do not have a valid match. 15

16 If you have reason to know or believe that allowing this person to do business in the United States would violate any of the Regulations, you should call the hotline and explain this knowledge or belief. Maintaining Current OFAC Lists: The MT Agent system provided by Smart Solutions Services has ongoing maintenance and support for OFAC updates. The compliance officer will make sure that the OFAC list is current and used by company s systems. Blocking/Freezing Funds or transactions whereby the sender or the receiver is in the OFAC / SDN list are subject to being blocked / frozen. These funds shall not be returned to the sender, instead a blocking program kicks on whereby if the company comes into possession of blocked property, then Caribbean Airmail, Inc shall block the funds by communicating with OFAC s Compliance Program Division for directives and advice. Rejection Compliance Officer determines OFAC rejecting funds/ transactions. Compliance Officer prepares and files reports, authorizes and documents rejection. Compliance Officer may communicate with OFAC s Compliance Program Division for directives and advice. Reporting Compliance Officer shall file a Company prohibition transaction report of blocked or frozen or rejected funds within 10 calendar days from the date the property became blocked. The report shall describe the action taken and must include a copy of the transaction order and all relevant documentation that supports the determination of action taken by the Company. OFAC requires comprehensive an annual report of all property blocked as of June 30 th is due by September 30 th of each year (form TDF ). Retention OFAC requires the retention of all reports and blocked or rejected transactions records for five (5) years. 16

17 Chapter 3. Politically Exposed Persons (PEPs) 'Politically Exposed Persons' (PEPs) means individuals who are, or have been, entrusted with prominent public functions in the local country or a foreign country, such as Heads of State or government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations or important political Sectiony officials. Business relationships with family members or close associates of PEPs involve reputational risks similar to PEPs themselves. The definition is not intended to cover middle-ranking or more junior officials in the foregoing categories. Local or foreign PEPs would include all Ministers, all MPs, and all Ministry officials with the rank of Undersecretary or above. Although there is no global definition of PEP, most countries have based their definition on the FATF definition: current or former senior official in the executive, legislative, administrative, military, or judicial branch of a foreign government (elected or not) a senior official of a major foreign political Sectiony a senior executive of a foreign government-owned commercial enterprise, being a corporation, business or other entity formed by or for the benefit of any such individual an immediate family member of such individual; meaning spouse, parents, siblings, children, and spouse's parents or siblings any individual publicly known (or actually known by the relevant financial institution) to be a close personal or professional associate. CAM has appropriate risk management systems and has implemented the following controls to determine whether a customer is a Politically Exposed Person (PEP), both at the time of establishing business relations and thereafter on a periodic basis. At a minimum, CAM due diligence PEP procedures is based on the actual policy and should include, but not be limited to, the following: 1) CAM utilizes publicly available information in order to establish whether a customer is PEP. 2) Identification: When CAM s employees or agents identifies a new client or existing client as a potential PEP, he/she must notify the compliance Department, and apply the standard due diligence and the following enhanced procedures and controls: a) Identify the sender and beneficial owner; b) Seek information directly from the individual regarding possible PEP status; c) Obtain information regarding employment or other sources of funds; d) Check references, as appropriate, to determine whether the individual is or has been a PEP; e) Identify the source of wealth 17

18 f) Obtain information about immediate family members or close associates who have transactions authority over any bank account submitted as source of funds; g) Determine the purpose of transfers transactions and the expected volume, nature and frequency of activity. 3) Enhanced Monitoring: Transactions with PEP relationship must be subject to periodic review to enhance monitoring and detect unusual and potentially suspicious activity. The Compliance committee during its quarterly meetings reviews list of transactions, if any, conducted by PEP, requests any further information and/or action and refer cases when necessary to the Board of Directors for approval. 4) Reviews Existing PEP Clients: Such relationships must be subject to periodic review to ensure that due diligence information remains current and the risk assessment and associated controls remain appropriate. Senior management must approve these reviews. The Compliance Committee reviews and approves continuing operations with PEP. Such review is than referred to the Board of Directors for approval. CAM establishes a client acceptance policy with regard to PEPs, taking into account the reputational and other risks involved. Senior management approval must be obtained before PEP is accepted as a customer. Where an existing customer is PEP, or subsequently becomes PEP, enhanced monitoring and customer due diligence measures must include: (a) Analysis of complex financial structures, including trusts, foundations or international business corporations; (b) A written record in the customer file to establish that reasonable measures have been taken to establish both the source of wealth and the source of funds; (c) Development of a profile of anticipated customer activity, to be used in ongoing monitoring; (d) Approval of senior management for allowing the customer s relationship to continue; (e) On-going account or transactions monitoring of the PEPs account. A financial institution s staff members are the first line of defense in preventing and detecting money laundering, and they play a crucial role in identifying clients or potential clients who are PEPs. It is vital that the risks, policies, procedures and processes associated with such individuals are communicated to relevant employees and form Section of the institution s regular AML/CTF training program. 18

19 Chapter 4. Currency Transaction Reports (CTRs) Section 4.1. Caribbean Airmail, Inc. Expectations Caribbean Airmail, Inc will file CTRs for all cash transactions of more than $10,000 in currency (inclusive of commissions) incurred in one day. A CTR will be filed for sending and payout transactions. Section 4.2. Structuring Company personnel are strictly prohibited from assisting or advising a customer about structuring transactions so as to avoid CTR reporting. Structuring is specifically prohibited by law and may result in the business, as well as the business employee, being subjected to monetary fines and even criminal prosecution and immediate termination. Examples of structuring include a customer dividing transactions between multiple financial services providers, multiple locations of a single financial services provider or multiple Tellers or Cashiers of a provider, or conducting transactions on different days, to avoid CTR reporting requirements. CAM s software system has been designed to help detect and prevent the structuring of transactions. Total cash amounts received from or paid to a customer are aggregated and the agent alerted when documentation is needed to file a CTR. Section 4.3. Responsibility for Completion of CTRs While we ensure that all the agents know how to file a CTR electronically and encourage them to complete CTRs, the CAM Compliance Department prepare the CTR to be submitted to FinCEN. All persons responsible for the completion of CTRs are expected to obtain and accurately record prior to completion of a reportable transaction all required information in the manner prescribed by the CTR instructions. The completed CTR will promptly be forwarded to the BSA Officer for review and filing. All CTRs will be maintained for a period of five (5) years. Civil and criminal penalties can be assessed against the business AND against the employee for failure to file a report, to supply information, or for filing a false or fraudulent report. Section 4.4. Verification Requirements Before a reportable transaction is concluded, the business must obtain and verify the name and address of the individual who presents the transaction (this may not be the same Sectiony as the beneficiary of the transaction(s)). Verification typically consists of examining an appropriate identification document presented at the time of the transaction, which contains the name and address of the presenter. If two or more individuals are present for the purpose of conducting the transaction, the name and address of each individual must be obtained, verified and recorded. 19

20 Section 4.5. Method of Verification Agent Compliance Manual Verification of identity (obtaining the individual s name and address) must be performed either by inspecting documents presented by the customer at the time of the transaction or by referring to a computerized record or file (e.g. a customer record in an automated system of the MSB representing data captured and verified previously) that reflects that the customer s name and address were previously verified and documented. Section 4.6. Unavailable or Unacceptable Identification In the situation where an individual attempts to conduct a reportable transaction and does not possess acceptable identification documents necessary to allow the business to appropriately verify the individual s name and address, the transaction must be refused. Section 4.7. Accuracy of CTRs All persons responsible for the completion of Currency Transaction Reports are expected to obtain and accurately record all required information in the manner prescribed by the CTR instructions. Persons completing CTRs should carefully review their work for accuracy and completeness prior to forwarding CTRs to the BSA Officer for filing. In no case will an employee file a CTR directly; they must be forwarded to the BSA Officer who will review for accurate completion and file the report. It is very important that CTRs be forwarded to the BSA Officer promptly to enable timely filing. Section 4.8. Centralized Review and Filing of CTRs CTRs will be reviewed for accuracy and filed centrally by the BSA Officer or designee. The BSA Officer, or designee, will complete (if necessary), review and sign each CTR as the Approving Official and will submit all CTRs via the BSA e-filing system with 15 days of the transaction(s). The BSA Officer will maintain copy of each CTR filed and confirmation submission page in the MSB s files for 5 years. In addition, the BSA Officer may periodically review communications from the IRS concerning CTR filing errors or omissions. If the company files a CTR and a completion error is reported, the BSA Officer will review and respond to such notices in a timely manner and maintain documentation of such on file for five years. 20

21 Chapter 5. Suspicious Activity Reporting Section 5.1. Overview of Suspicious Activity Reporting Each agent has a duty to report any actual or suspected money laundering, so it is imperative that you immediately report all suspicious activity to the Compliance Officer. Each employee is also expected to report to the Compliance Officer any actual or suspected violation of this compliance program. If you reasonably suspect that any customer or any employee of the Company has previously or is currently involved in money laundering or in a violation of this compliance Program, it is your duty to immediately report those suspicions to the Compliance Officer. Section 5.2. Thresholds of Reportable Activity Any transaction conducted or attempted by, at, or through a money services business involving or aggregating funds or other assets of at least $3,000 must be reported as suspicious when the money services business knows, suspects, or has reason to suspect that: 1. The transaction involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity (including, without limitation, the nature, source, location, ownership or control of such funds or assets) as Section of a plan to violate or evade any Federal law or regulation or to avoid any transaction reporting requirement under Federal law or regulation; 2. The transaction is designed, whether through structuring or other means, to evade any regulations promulgated under the Bank Secrecy Act; or 3. The transaction has no business or apparent lawful purpose and the money services business knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction. Institutions MAY also report other suspicious transaction activity regardless of the dollar amount pertaining to potential unlawful activity and potential violation of the Bank Secrecy Act. Caribbean Airmail, Inc. agents are expected to report ALL suspicious transaction activities to the BSA Officer regardless of dollar amount. In the event where specific knowledge of criminal activity is known, transactions must be refused and the BSA Officer notified immediately and without delay. Section 5.3. Timeline for Referring Suspicious Activity and Filing SARs Some suspicious transactions require immediate action. If you have reason to suspect that a customer's transactions may be linked to terrorist activity against the United States, you should immediately call the Compliance Officer who would then call the Financial Institutions Hotline, toll-free at: The SAR rules require that a SAR be filed no later than 30 calendar days from the date of the initial detection of the suspicious activity, unless no suspect can be identified. In that case, the time period for filing a SAR is extended to 60 days. The business may need to review transaction activity for a customer to determine whether to file a SAR. The need for a review of customer activity or transactions does not necessarily indicate a need to file a SAR. The time 21

22 period for filing a SAR starts when the business, during its review or because of other factors, knows or has reason to suspect that the activity or transactions under review meet one or more of the definitions of suspicious activity. All agents employees are expected to be expeditious in their review and referral of suspicious activity, which can potentially be of significant assistance to law enforcement. If information becomes known that the source or use of funds is from/for illegal activities, the transaction will not be processed. Where possible the transaction will be refused; if information becomes known after funds have already been accepted, the BSA Officer should confer with appropriate law enforcement. For violations requiring immediate attention, such as when a reportable violation is ongoing, the BSA Officer will notify, by telephone, an appropriate law enforcement authority in addition to filing a timely SAR. An appropriate law enforcement authority would generally be local law enforcement, the local office of the IRS Criminal Investigation Division, Immigration and Customs Enforcement (ICE) or the Federal Bureau of Investigation (FBI). The BSA Officer or designee will make such contact with law enforcement when necessary. Section 5.4. SAR Filing on Continuing Activity One purpose of filing SARs is to identify violations or potential violations of law to the appropriate law enforcement authorities for criminal investigation. This objective is accomplished by the filing of a SAR that identifies the activity of concern. If this activity continues over a period of time, such information should be made known to law enforcement. FinCEN s guidelines indicate that financial institutions should report continuing suspicious activity by filing a report at least every 90 days for recurrences of the same suspicious activity; new or different types of suspicious activity should each receive a SAR as they occur. This practice will notify law enforcement of the continuing nature of the activity, as well as remind the business that it should continue to review the suspicious activity to determine whether other actions may be appropriate, such as management determining that it is necessary to refuse further transactions from the customer or terminate an employee that is the subject of the filing. In those cases where reportable activity continues and additional SARs must be filed for such ongoing activity, the following steps will be taken: BSA Officer will be notified of the need to file a SAR for continuing activity; A decision will be made and documented concerning whether or not to perform further transactions for the customer; and, The BSA Officer will notify an appropriate law enforcement authority. If any transaction is known to be the proceeds of illegal activity or for furtherance of illegal activities, it will be refused, a SAR will be filed, and the customer relationship severed. Section 5.5. The SAR Procedure The general policy of CAM is to file SARs when the circumstances warrant it, regardless of the amount involved in the activity. Under no circumstances may any person inform a customer that a SAR may be filed. 22