BSA for BOD Fort Worth Community Credit Union.ppt

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					Leaders Credit Union
 Board Presentation


 Bank Secrecy Act
    April 2007
      BANK SECRECY ACT
Passed by Congress in 1970
Requires financial institutions to report information
and keep records of certain monetary transactions
Referred to as an “Anti-Money Laundering” law
Designed to identify the source, volume, and
movement of currency and other monetary
instruments into or out of the U.S. or deposited into
financial institutions
The BSA was put into place to safeguard the U.S.
financial system from the abuses of financial crimes,
including money laundering, terrorist financing,
and other illicit financial transactions
    BANK SECRECY ACT
Money Laundering Control Act of 1986
Anti-Drug Abuse Act of 1986
Currency and Foreign Transactions
Reporting Act
Financial Recordkeeping and the
Department of Treasury’s Reporting of
Currency and Foreign Transactions rules
USA Patriot Act, 2001
  Source: Financial Crimes
Enforcement Network (FinCEN)
     BANK SECRECY ACT
12 USC 1818(s)(2) requires that the NCUA include a
review of the BSA compliance program at each examination
of a credit union. The NCUA may use their authority to
enforce compliance with the BSA.
Regulatory agencies may take a range of actions in the event
of a BSA violation
    Criticism in examination report
    Memorandum of Understanding
    Cease and Desist order
    Civil money penalties
    Referral to Treasury
      BANK SECRECY ACT
Civil Penalties for Violations
  Federal banking agencies and FinCEN,
  respectively, can bring civil money penalty
  actions for violations of the BSA. In addition,
  to criminal and civil money penalty actions
  taken against them, individuals may be
  removed pursuant to 12 USC 1818(e)(2) for a
  violation of the AML laws under Title 31 of
  the U.S. Code.
  Significant Enforcement Actions
FinCEN issued two large civil money penalties in
December 2006; Beach Bank in Miami, Florida for
$800,000.00 and Foster Bank in Chicago, Illinois for
$2,000,000.00. Violations included inadequate AML
program, inadequate internal controls, failure to report
suspicious activity, lack of independent testing, etc.
NCUA issued a “Cease and Desist Order” against the
Dover N.J. Spanish American Federal Credit Union in
February 2007 for substantial BSA compliance
problems. ($15,000,000.00 with 4,000 members)
    BANK SECRECY ACT

Money Laundering – filtering money from
illegal activities through the financial
system to conceal illegal sources of income
Laundered money may be deposited or
withdrawn in a series of transactions to hide
the illegal activity
    BANK SECRECY ACT
Terrorist Financing
  Intended to intimidate through the threat of
  violence
  Goal – to compel a government or organization
  to do something, or refrain from doing
  something that will result in furthering the
  terrorist’s agenda
  Ideological motivation
  Legitimate, as well as unlawful, sources
    BANK SECRECY ACT
Terrorist illegal activities include:
  Extortion
  Kidnapping
  Narcotics trafficking
  Smuggling
  Fraud schemes, such as identity theft
    BANK SECRECY ACT
Money Laundering Control Act of 1986:
  Imposes criminal liability on a person or
  institution that knowingly assists in money
  laundering or who structures transactions to
  avoid reporting it
  Financial Institutions must establish and
  maintain procedures designed to meet
  compliance guidelines according to BSA
  requirements
    BANK SECRECY ACT
Money Laundering Methods:
  Currency smuggling
  Structured deposits or withdrawals from
  accounts
  Purchases of various types of monetary
  instruments
  Credit, debit or stored value cards
  Funds transfers
    BANK SECRECY ACT
BSA reportable transactions include:
  Deposits or withdrawals of more than $10,000
  in cash in a day
  Purchase of monetary instruments (money
  orders, cashiers checks, travelers cheques) with
  more than $3,000 in cash
  If member inquires about how to do the
  transaction without being reported, LCU must
  file a “Suspicious Activity Report”
    BANK SECRECY ACT
LCU complies with BSA as outlined in
Board policy
Cash transactions exceeding $10,000 will
be reported on a Currency Transaction
Report form FinCEN104
Suspicious Activity Reports are filed as
required
    BANK SECRECY ACT
SUSPICIOUS ACTIVITY REPORTS
NCUA established thresholds for credit
unions:
  No threshold – If credit union is certain that an
  insider is connected with the known or
  suspected crime, reporting is required,
  regardless of the amount involved
    BANK SECRECY ACT
$5,000 threshold – Credit union will report crimes
of $5,000 or more if it knows the identity of the
suspect or suspects the following:
  Transaction involves money laundering
  Transaction is designed to specifically evade the BSA
  Transaction has no apparent lawful purpose or is not
  the sort of transaction in which the account holder
  usually engages, and the credit union can determine no
  reasonable explanation for the transaction
     BANK SECRECY ACT
$25,000 threshold – The credit union must report all
known or suspected crimes of $25,000 or more even if it
does not know the identity of the suspect.
SAR reports are confidential. The member can NOT be
told that a report has been filed.
Employees who are subpoenaed or requested to disclose a
SAR must decline unless it is by FinCEN, an appropriate
law enforcement agency, or supervisory agency
Disclosure of a SAR is a FELONY and could land the
discloser in jail.
     BANK SECRECY ACT
LCU does not sell monetary instruments to non-members
LCU reviews a report daily, which tracks all transactions
that require a Currency Transaction Report be filed when a
member makes single or multiple deposits on the same
business day equaling $10,000.01 or more.
The report also tracks transactions between $3,000 and
$10,000 for tracking purposes of monetary instruments
Records are retained for all originated Wire Transfers
All records are retained for the required 5 year period
    BANK SECRECY ACT
USA Patriot Act-Customer Identification
Program (Board policy 10/1/2003)
Verify identity of any person seeking to
open an account
Maintain records of documents used
Check for OFAC listing and SDN listing
ID Flag Verification through PAC
      BANK SECRECY ACT
Compliance Programs and Procedures
 Internal controls, policies and procedures to
 assure ongoing compliance
 Independent Audit
 Designate a BSA Compliance Officer
 Ongoing training for Staff and Board
Bank Secrecy Act
Leaders Credit Union
 Board Presentation



                   Facilitated by
             Rita McCaslin, EVP

				
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