Anti-Money Laundering Policy Manual Table of Contents [Sample Client] Table of Contents

Transcription

1 Table of Contents [ Client] Table of Contents TABLE OF CONTENTS... 1 CHAPTER 1 INTRODUCTION GOALS AND OBJECTIVES REQUIRED REVIEW APPLICABILITY MONEY LAUNDERING DEFINED AML RISK ASSESSMENT BASICS OF THE AML COMPLIANCE PROGRAM AML COMPLIANCE OFFICER DESIGNATION... 6 CHAPTER 2 ACCOUNTABILITY AND MONITORING INTERNAL MONITORING AND CONTROLS AML COMPLIANCE OFFICER ACCOUNTABILITY BOARD OF DIRECTORS AND SENIOR MANAGEMENT OVERSIGHT AML INTERNAL CONTROLS... 9 CHAPTER 3 STAFF AND TRAINING ONGOING TRAINING NEW HIRE TRAINING AML COMPLIANCE OFFICER TRAINING CHAPTER 4 STATUTES AND REGULATIONS PENALTIES CORPORATE AND STATUTORY NONBANK RESIDENTIAL MORTGAGE LENDERS AND ORIGINATORS (RMLO) ANTI-MONEY LAUNDERING PROGRAM SAR FILING CHAPTER 5 SUSPICIOUS ACTIVITY REPORTING (SAR) SAR DECISION MAKING ACTIVITIES SUBJECT TO SAR FILING REPORTING POTENTIALLY SUSPICIOUS ACTIVITY FFIEC RED FLAGS Customers Who Provide Insufficient or Suspicious Information Lending Activity SAR FILING ON CONTINUING ACTIVITY SAR QUALITY CHAPTER 6 SAR FILING SYSTEM SUPERVISORY USER Copyright [ Client] and its licensor. ALL RIGHTS RESERVED. Without the prior written permission of [ Client] and its licensor, no part of this work may be used, reproduced or transmitted in any form or by any means, by or to any party outside of [ Client]. 1

2 Table of Contents [ Client] 6.2 DISCRETE FILING BATCH FILING STATUS TRACKING ACKNOWLEDGEMENTS ALERTS SECURE MESSAGING EXEMPTIONS SAR CONFIDENTIALITY SAFE HARBOR RECORD RETENTION POTENTIAL IDENTITY THEFT CHAPTER 7 AML RED FLAGS RESPONDING TO RED FLAGS CHAPTER 8 SHARING AML INFORMATION FINCEN AND OTHER FEDERAL LAW ENFORCEMENT RESEARCH LIMITS NONDISCLOSURE SHARING INFORMATION WITH OTHER FINANCIAL INSTITUTIONS REPORTING TO FANNIE MAE AND FREDDIE MAC Fannie Mae Reporting Requirements Freddie Mac Reporting Requirements CHAPTER 9 OFFICE OF FOREIGN ASSET CONTROL CUSTOMER INFORMATION REQUIRED Information for Identification of Individuals Information for Identification of Businesses Existing Customers Reasonable Belief Identification Using Nondocuments LACK OF VERIFICATION OFFICE OF FOREIGN ASSET CONTROL (OFAC) TAX PAYER IDENTIFICATION REQUIREMENT RECORD RETENTION NOTICE REQUIRED CHAPTER 10 APPENDIX SUSPICIOUS ACTIVITY INVESTIGATION REPORT TABLE OF RELEVANT NONIMMIGRANT VISA CLASSES CUSTOMER IDENTIFICATION NOTICE Copyright [ Client] and its licensor. ALL RIGHTS RESERVED. Without the prior written permission of [ Client] and its licensor, no part of this work may be used, reproduced or transmitted in any form or by any means, by or to any party outside of [ Client]. 2

3 Introduction Goals and Objectives [ Client] Chapter 1 Introduction [ Client] is committed to the highest standards of anti-money laundering (AML) compliance and requires all management and employees to follow these policies and adhere to these standards to prevent the use of our institution and/or its products and services for money laundering purposes. 1.1 Goals and Objectives The standards set out in this policy represent minimum requirements based on applicable legal and regulatory guidance and apply throughout [ Client] s operations. These requirements are intended to prevent [ Client], our employees, and third-party vendors from violating federal regulations, including being misused for money laundering, terrorist financing, or other financial crime. 1.2 Required Review [ Client] requires this policy be reviewed no less than annually. The above required annual review shall include the compliance of this policy with current law, regulation, or directive, the procedural implementation of this policy within the then current scope of [ Client] s business lines and operations, internal or external audit results received during the previous year, any responses or changes which may be appropriate in consideration of Suspicious Activity Reports (SARs) filed during the previous year, and then current industry trends or regulatory guidance. 1.3 Applicability The purpose of this policy is to implement a program of anti-money laundering strategies and Suspicious Activity Reporting as required by the Bank Secrecy Act (BSA), USA PATRIOT Act, and related regulations. Wherever state or local regulations overlap and are stricter than the requirements set out in this policy, the more conservative approach shall be applied. If any applicable laws are in conflict with this policy, [ Client] must consult with the appropriate legal counsel to resolve the conflict and to set forth [ Client] s policies and procedures for compliance. Copyright [ Client] and its licensor. ALL RIGHTS RESERVED. Without the prior written permission of [ Client] and its licensor, no part of this work may be used, reproduced or transmitted in any form or by any means, by or to any party outside of [ Client]. 3

4 Introduction Money Laundering Defined [ Client] 1.4 Money Laundering Defined Money laundering is the participation in any transaction that seeks to conceal or disguise the nature or origin of funds derived from illegal activities, such as fraud, corruption, organized crime, or terrorism, etc. Money laundering generally does not involve currency at every stage of the laundering processes. The underlying offences for money laundering may be defined by local laws. Although money laundering is a diverse and often complex process, it basically involves three independent steps that can occur simultaneously: 1. 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. Examples may include dividing large amounts of currency into less conspicuous smaller sums that are deposited directly into a bank account, or purchasing a series of monetary instruments (e.g., cashier s checks or money orders) that are then collected and deposited into accounts at another location or financial institution. However, under the federal Bank Secrecy Act of 1970 (BSA), 31 U.S.C.A et seq., financial institutions are required to report deposits of more than $10,000 in cash made by an individual in a single day. To disguise criminal activity, launderers may deposit cash or valuables through a legitimate "front" operation (e.g., a check-cashing service or a jewelry store). 2. Layering: The second stage of the money laundering process is layering, which involves moving funds around the financial system, often in a complex series of transactions to create confusion and complicate the paper trail. These layers are designed to hamper the audit trail, disguise the origin of funds, and provide anonymity. 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. This may also include transferring funds to countries outside the United States that have strict bank secrecy laws. Once the illegal funds are deposited in a foreign bank, the funds can be moved through accounts of shell corporations, which exist solely for laundering purposes. 3. Integration: The third stage and 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 sale of real estate, investment securities, foreign trusts, or other assets. These stages are not static and may overlap broadly. Financial institutions may be misled at any point in the money laundering process. Terrorist groups must also gather financial assets in order to attempt to accomplish their goals. Terrorist financing may not involve the proceeds of criminal Copyright [ Client] and its licensor. ALL RIGHTS RESERVED. Without the prior written permission of [ Client] and its licensor, no part of this work may be used, reproduced or transmitted in any form or by any means, by or to any party outside of [ Client]. 4

5 Introduction Basics of the AML Compliance Program [ Client] Lending activities, particularly loans secured by cash collateral and marketable securities [ Client] s risk assessment program should be independently audited and the risk assessment program should be updated as needed. In the absence of any changes in the company s risk profile (i.e., new products or services, etc.), the risk assessment program should be reviewed and reassessed at least every 12 to 18 months. 1.6 Basics of the AML Compliance Program The AML compliance program must provide for the following minimum requirements: A system of internal controls to ensure ongoing compliance Independent testing of AML compliance Designate an individual or individuals responsible for managing AML compliance (AML compliance officer) Training for appropriate personnel In addition, OFAC and CIP must be included as part of the AML compliance program. 1.7 AML Compliance Officer Designation This policy provides for the appointment and designation of an AML compliance officer. The AML compliance officer is responsible for daily coordination and monitoring of compliance within this policy and for overseeing and administering of the filing of Suspicious Activity Reports with proper agencies when deemed appropriate. The AML compliance officer is responsible for reporting any suspicious situations and other ongoing compliance matters in this area to senior management. Notwithstanding the required annual review, the AML compliance officer shall examine anti-money laundering strategies, goals, and objectives on an ongoing basis and maintain an effective anti-money laundering program. The AML compliance officer may delegate AML duties to other employees, but the officer should be responsible for overall AML compliance. The board of directors is responsible for ensuring that the AML compliance officer has sufficient authority and resources (monetary, physical, and personnel) to administer an effective AML compliance program based on [ Client] s risk profile. The AML compliance officer should be fully knowledgeable of the AML program and all related regulations. The AML compliance officer should also understand [ Client] s products, services, customers, entities, and geographic locations, and the potential money laundering and terrorist financing risks associated with those activities. Copyright [ Client] and its licensor. ALL RIGHTS RESERVED. Without the prior written permission of [ Client] and its licensor, no part of this work may be used, reproduced or transmitted in any form or by any means, by or to any party outside of [ Client]. 6

6 Statutes and Regulations Penalties Corporate and Statutory [ Client] Chapter 4 Statutes and Regulations The statute underlying this policy is the Bank Secrecy Act (BSA) (31 USC , 12 CFR Part 21). The BSA originally focused on traditional financial institutions and included requirements such as building security, customer identification, currency transaction reporting, anti-money laundering, and Suspicious Activity Reporting. The Bank Secrecy Act originally did not apply to nonbank mortgage lenders. On February 6, 2012, FinCEN, a bureau of the Department of the Treasury (Treasury), issued a final rule defining nonbank residential mortgage lenders and originators (RMLO) as loan or finance companies for the purpose of requiring them to establish anti-money laundering programs and report suspicious activities under the Bank Secrecy Act. While nonbank RMLOs are now included by definition within the Bank Secrecy Act, not all requirements of the Bank Secrecy Act apply to nonbank RMLOs. The Final Rule defines these requirements and limitations and is explained in further detail within the following subsections of this policy. FinCEN is the delegated administrator of the Bank Secrecy Act. The Federal Financial Institutions Examination Council (FFIEC) is a formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Board of Governors of the Federal Reserve System (FRB), the Federal Depo sit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Consumer Financial Protection Bureau (CFPB), and to make recommendations to promote uniformity in the supervision of financial institutions. In 2006 the State Liaison Committee (SLC) was added to the Council as a voting member. The SLC includes representatives from the Conference of State Bank Supervisors (CSBS), the American Council of State Savings Supervisors (ACSSS), and the National Association of State Credit Union Supervisors (NASCUS). The FFIEC maintains an examination manual for BSA/AML. This manual is available online. 4.1 Penalties Corporate and Statutory Both civil and criminal penalties exist for the violation of the Bank Secrecy Act, anti-money laundering, and/or Suspicious Activity Reporting. The information in this policy should not be construed as comprehensive, limiting, or legal advice. It is offered to provide all readers of this policy a sense of the seriousness with which [ Client] and its regulators view these policies and the degree to which violations may be penalized. Violations of AML Policy may have ramifications for [ Client] and its employees. Violation of regulations and/or laws may result in civil and/or criminal penalties depending upon the nature of the offense. Corporate ([ Client]) Copyright [ Client] and its licensor. ALL RIGHTS RESERVED. Without the prior written permission of [ Client] and its licensor, no part of this work may be used, reproduced or transmitted in any form or by any means, by or to any party outside of [ Client]. 13

7 Suspicious Activity Reporting (SAR) SAR Decision Making [ Client] Chapter 5 Suspicious Activity Reporting (SAR) [ Client] must establish a program that will enable the identification of activities which may require the filing of a SAR. The compliance officer will make the decision as to which suspected activities should be reported, and how they should be reported (i.e., as mortgage fraud or identity theft). 5.1 SAR Decision Making After a thorough research and analysis has been completed, the AML compliance officer will be the final decision maker regarding SAR filing. The AML compliance officer should document SAR decisions, including the specific reason for filing or not filing a SAR. 5.2 Activities Subject to SAR Filing SARs should be filed in the event of any of the following situations: Criminal violations involving insider abuse in any amount. Known or suspected federal criminal violations committed against or through [ Client] aggregating $5,000 or more where a suspect can be identified. Known or suspected federal criminal violations aggregating $25,000 or more committed against or through [ Client] regardless of whether a potential suspect can be identified. Transactions conducted or attempted by, at, or through [ Client] (or an affiliate) and aggregating $5,000 or more if [ Client] knows, suspects, or has reason to suspect that the transaction o may involve potential money laundering or other illegal activity (e.g., terrorism financing) ; o is designed to evade any regulations promulgated under the AML or BSA; o has no business or apparent lawful purpose or is not the type of transaction in which the particular consumer would normally be expected to engage, and there is no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction; or o involves computer intrusion. Copyright [ Client] and its licensor. ALL RIGHTS RESERVED. Without the prior written permission of [ Client] and its licensor, no part of this work may be used, reproduced or transmitted in any form or by any means, by or to any party outside of [ Client]. 16