FEDERAL EMPLOYEES CREDIT UNION DES MOINES BSA/AML/OFAC COMPLIANCE RISK ASSESSMENT

Transcription

1 FEDERAL EMPLOYEES CREDIT UNION DES MOINES BSA/AML/OFAC COMPLIANCE RISK ASSESSMENT This BSA/AML/OFAC compliance risk assessment is conducted for the purpose of evaluating Federal Employees Credit Union's exposure to being used to further illegal activity and terrorist financing. It reflects the credit union's position as of May 31, It will be updated annually or more frequently if circumstances dictate and reported to the Board of Directors. Size As of May 31, 2011, Federal Employees Credit Union's assets were $19,244,996 and it has three branches. The credit union has ten full-time equivalent employees and very little turnover in key positions. The individual responsible for BSA/AML/OFAC compliance is the Credit Union President, the credit union s compliance officer (i.e. he/she has other compliance related responsibilities in addition to BSA compliance). The credit union's data processing services are provided by CUSA Technologies ONCU. The system s standard reports are used to monitor member activity. The credit union uses this system to verify member information and run OFAC comparisons at account inception. Federal Employees Credit Union's risk rating based on size = low. Geography Federal Employees Credit Union has branches at the following locations: 210 Walnut St., Ste. 132 Des Moines, IA And 2524 Post St. Des Moines, IA And 601 Highway 6 West Room 3W08 Iowa City, IA This area is predominantly rural with the largest city being Des Moines (population 200,000). Two of the credit union's branches are in or adjacent to an area where an official designation, e.g. High Intensity Money Laundering and Related Financial Crime Areas (HIFCA) or High Intensity Drug Trafficking Area (HIDTA) would causing the credit union to enhance its procedures. Federal Employees Credit Union's risk rating based on geography = moderate.

2 Membership Federal Employees Credit Union's membership is primarily government employees, some small employee groups and family members. Their primary financial needs are for consumer needs or sole proprietor small business. It is stable; there are very few people moving into the credit union's field of membership. Most new accounts are opened for existing members or people already known to credit union employees. There are no non-u.s. persons in the credit union's membership. The credit union has no members classified as high risk. International transactions occur very infrequently and the credit union has no evidence that any of its members has connections to high-risk geographic locations within the U.S. Federal Employees Credit Union's risk rating based on membership = low. Products and Services Federal Employees Credit Union's products and services are conventional in nature. With the exception of credit cards, unless the person opening the account is an existing member, all account relationships are established in person on credit union premises. In general, the credit union s product lines include: Electronic banking ATMs; debit cards; ACH debits and credits (RDFI only); internet banking (not account opening); Electronic payment services limited to funds transfers for established members; Sale of monetary instruments limited to established members; and non-members dealing with government agencies government agencies non-members cashing on-us checks; Conventional deposit services checking; savings; and time deposits; Conventional lending services consumer; real estate; and credit cards. Historically, international transactions have been limited to wire transfers to consumer members who are on vacation, in the military service outside the U.S or are employed by the U. S. Government. Federal Employees Credit Union's risk rating based on products and services = low.

3 Operations Federal Employees Credit Union sends and receives a relatively low number of wire transfers and, in the last three years, two wire transfer destinations have been outside the U.S. Over the last three years, the credit union has filed approximately one CTR and one SAR annually. CTR and SAR filing is paper based with conversion to online based occurring in As of the date of this assessment, Federal Employees Credit Union had zero members exempt from currency transaction reporting under Phase I procedures and zero members under Phase II procedures. Federal Employees Credit Union has never had a positive response to an OFAC or 314(a) query or to the filing of a SAR. Federal Employees Credit Union's risk rating based on operations = low. OFAC As noted above, Federal Employees Credit Union has: a stable, known field of membership; no high-risk members; no overseas branches or correspondent accounts outside the U.S.; limited electronic banking services and no accounts being opened via the Internet; a low volume of wire transfers and, historically, those sent overseas are to established members who are on vacation, in the military service or employed by the U. S. Government; and no international transactions other than wire transfers. The credit union also has no history of OFAC violations. The Bank Secrecy Act s (BSA) Travel Rule (31 CFR (g)) requires that all parties to ACH transactions with an IAT SEC code be checked to the OFAC official list. International ACH Transactions (IAT) use a Standard Entry Class (SEC) Code of IAT and are defined as: a. At least one processing financial institution or third-party is domiciled in the U. S. or otherwise under U. S. jurisdiction and at least one party to the transaction is outside U. S. jurisdiction; or, b. Most or all parties to the transaction are outside the U. S., but at least one processing financial institution is subject to U. S. jurisdiction. The credit union will run its entire ACH file through CUSA s software to determine if any parties on the ACH file are on the OFAC watch list. Federal Employees Credit Union's risk rating based on OFAC = low. Conclusion Federal Employees Credit Union is at relatively low risk of being used in money laundering or terrorist financing. Its related policies and procedures should reflect legal requirements and may be supplemented by additional features as felt appropriate by the credit union's management

4 Examiners should use A.Bank Secrecy Act Anti-Money Laundering Low the following matrix, as appropriate, Examination Moderate when assessing the quantity of BSA/AML risks. Manual High B.APPENDIX J C.QUANTITY OF RISK MATRIX Stable known customer base. Customer branching, base merger, increasing or acquisition. due to A base geographic large in and a wide area. growing and diverse customer No informational/non-transactional. the electronic web site banking is (e-banking) The and offers bank is limited beginning products e-banking and banking (i.e., payment account products transfers, and services the Internet). or accounts opened e-bill via On received database, the basis from of the information large there are BSA-reporting transactions. currency or structured few no On received database, the basis from of the information volume of large there currency is BSA-reporting a moderate On the basis of information structured transactions. received database, volume from there the is BSA-reporting structured of large transactions. currency a significant Identified customers a and few businesses. high-risk Identified high-risk businesses. customers a moderate These may and number include of Identified check stores, de cambio, cashers, money import transmitters, convenience risk customers a large and number businesses. of high- or export casas These cashers, money may convenience include check cambio, transmitters, import or export casas stores, de services. The bank offers a wide array of e-

5 companies, politically (PEPs), nonresident exposed offshore persons aliens corporations, companies, offshore corporations, (NRAs), and foreign individuals). PEPs, individuals). NRAs, and foreign No financial bank foreign institution correspondent activities, does offer not engage special-use accounts. in pouch The The correspondent accounts, through provide U.S. accounts or offer dollar (PTAs), payable accounts, bank has but typically a financial few foreign with institution The draft services. or financial adequate procedures institutions AML from policies low-risk with number countries, and minimal pouch and bank maintains a large financial of foreign correspondent inadequate institutions AML policies accounts with and with activities, PTAs, services. or U.S. special-use dollar draft accounts, procedures located or high-risk from, particularly activities, offers substantial jurisdictions, PTAs, special-use pouch services. or U.S. dollar draft accounts, The private and bank banking offers services limited or or no or services. asset management products trust The private and bank banking offers services limited domestic or services asset management over which the products or bank trust The domestic has Strategic investment plan may discretion. banking bank or and offers trust international and significant asset private trust business. be to increase management services. and Private products banking or are growing. asset management Products offered services or trust include services, predominantly investment and trust accounts management versus where the nondiscretionary bank has full are Few international accounts or investment discretion. very activity low volume the accounts. of currency Moderate accounts currency activity. with level unexplained of international Large accounts currency number activity. with unexplained of international A transfers limited number for customers, of funds A transfers. moderate A few number international of funds A funds large transactions number of noncustomer and payable

6 noncustomers, transactions, transfers. and limited no foreign third-party funds funds business low-risk transfers countries. accounts from with personal typically or upon (PUPID) from proper activity. identification accounts personal to or or from business Frequent high-risk funds jurisdictions, havens or jurisdictions. and financial secrecy The intensity (HIDTA)172 bank drug is not or trafficking high-intensity located in area a high-the financial fund relationships transfers crime involve or area account (HIFCA). HIDTAs or No or fund an bank transfers HIFCA. is located Bank or account has in an some HIDTA Bank relationships that involve HIDTAs HIFCA. is located A large in an number HIDTA of and fund HIFCAs. or HIFCAs. transfers involve HIDTAs or account or HIFCAs. relationships No geographic transactions locations. with high-risk Minimal risk geographic transactions locations. with high- Significant with locations. high-risk volume geographic of transactions Low frontline service turnover representatives, personnel of key (i.e., personnel customer tellers, or other branch personnel). or Low but branches frontline turnover may personnel of have key changed. personnel, in High personnel turnover, positions. especially in key Backward Table of Contents Forward