FIRST COMMUNITY CREDIT UNION OFAC AND BSA RISK ASSESSMENTS

Transcription

1 FIRST COMMUNITY CREDIT UNION OFAC AND BSA RISK ASSESSMENTS I. OFAC RISK ASSESSMENT - APRIL 30, 2006 All Credit Union staff shall be aware of risks involved in conducting daily transactions and shall take appropriate measures to ensure transactions are not conducted for any member, business, entity or vendor found on the OFAC list. The following is a list of services offered by First Community Credit Union and the measures that must be taken by FCCU staff to ensure OFAC compliance. Risk Assessment Primary Share Accounts Primary Members Joint Owners Secondary Accts: Share/Money Market/Checking/CD Primary Members Joint Owners Deposit Accounts POD/Beneficiaries Loans Primary Borrowers Guarantors/Co- Signers Loans Owners of Collateral Safe Deposit Box Primary Owners Joint Owners Wire Transfers In Wire Transfers Out Managing & Controlling Risk Pull a credit report. The credit report will search the OFAC database for any known persons Check OFAC list. If new checking account, pull a credit report. The credit report will search the OFAC database for any known persons Before disbursing funds, check the OFAC list using name, address, country, SSN and account number fields. Search OFAC list when taking the application using name, address, country, SSN and account number fields. When processing collateral, be alert to suspicious activity. Search OFAC list using name, address, country, SSN and account number fields. Search OFAC list using name, address, country, SSN and account number fields. Both the sending and receiving parties on incoming wire transfers will be manually checked against the OFAC list. Both the sending and receiving parties on outgoing wire transfers will be manually 1

2 ACH Transfers In ACH Transfers Out ATM/Debit Card ATM Machine Deposits Currency Exchanges Depositing or Cashing Checks Purchase of Traveler s Checks, Money Orders. checked against the OFAC list. Although Mid-States Corp. FCU will search all wire transfers against the OFAC database, FCCU will also search the OFAC list using name, address, country, SSN and account number fields. Although Mid-States Corp. FCU will search all wire transfers against the OFAC database, FCCU will also search the OFAC list using name, address, country, SSN and account number fields. When issuing a debit card, search against OFAC list using name address, country, SSN and account number fields. Instant Cash/Wells Fargo processes all ATM deposits. Because these transactions are not processed in-house, FCCU does not have the access to check these transactions. However, access to the OFAC list will be available for follow-up on suspicious transactions. When exchanging currency, tellers will be alert to suspicious activity. Access to the OFAC list will be available for follow-up on suspicious transactions. Compliance procedures for filing CTRs and SARs will also be addressed, if necessary. Tellers and FSRs will be alert to suspicious activity. Access to the OFAC list will be available for follow-up on suspicious transactions. Tellers and Member Service Consultants will be alert to suspicious activity. Access to the OFAC list will be available for follow-up on suspicious transactions. Compliance procedures for filing CTRs and SARs will also be addressed, if necessary. If purchased with cash between $3,000 and $10,000, teller will also record transaction on special list. 2

3 Purchase of Cashiers Checks Loan/Visa Payments All of the same applies as does the purchase of Traveler s checks and money orders. In addition, the teller or FSR will search the OFAC list for the payee name on the check. Tellers will be alert to suspicious activity. Access to the OFAC list will be available for follow-up on suspicious transactions. Credit Card Cash Advances Tellers and FSRs will be alert to suspicious activity. Access to the OFAC list will be available for follow-up on suspicious transactions. VISA Credit Card Transactions Certegy processes all VISA credit card transactions. Because these transactions are not processed in- house, FCCU does not have the access to check these transactions. However, access to the OFAC list will be available for follow-up on suspicious transactions. FIRSTELL(Phone Banking) Transactions are internal. The accounting department may access the OFAC database for follow-up on suspicious transactions. Internet Banking Bill Payment Transactions are internal. The accounting department may access the OFAC database for follow-up on suspicious transactions. Mid-Atlantic Corporate Federal Credit Union processes bill payment transactions for FCCU. FCCU does not have the technology to check the transaction description field or the payee field. However, access to the OFAC list will be available for follow-up on suspicious transactions. II. BSA RISK ASSESSMENT July 5, 2006 The Credit Union will continuously monitor its products and services, member/business account activity and geographic areas in which it serves for changes in BSA/AML risk exposure. This risk assessment will be amended from time to time and monitored no less than annually and as changes in the Credit Union occur. 3

4 The following is the most recent risk assessment of FCCU s operations A. CORRESPONDENT & PARALLELL BANKING (Low) These services are not provided by nor functions of First Community Credit Union. B. ELECTRONIC BANKING (Low) FCCU offers internet banking with limited functionality and does not allow members to: 1. Open accounts 2. Transfer funds to unassociated member s account 3. Transfer funds to an account outside of the Credit Union 4. Create a third-party check 5. Change address C. ELECTRONIC BILL PAYMENT (Moderate) The Credit Union offers online bill payment. This product allows members to make three-party payments to the payee of their choice. Members cannot make payments to payees located outside of the U.S. D. ELECTRONIC PAYMENT SERVICES (Moderate) ACH The Credit Union offers standard ACH services to its members. ACH items originated by the Credit Union are generally recurring and have been acknowledged and approved by the member in writing. Payable Upon Proper Identification (PUPID) This service is not provided by the Credit Union. Wire Transfers FCCU processes incoming and outgoing wires. The Credit Union does process international wires typically to low-risk countries. Frequent wires to 4

5 or from a high-risk country (see geographic assessment) will prompt the Credit Union to monitor the applicable member account(s). E. SALE OF MONETARY INSTRUMENTS (Moderate) The credit union sells money orders, travelers checks and cashiers checks. These items are only sold to members. Frequent cash purchases over or just under $3000 will prompt the Credit Union to monitor the applicable account(s) and possibly designate the account(s) as high-risk. F. DEPOSIT AND NON-DEPOSIT ACCOUNT SERVICES (Low) The Credit Union offers the following deposit accounts: 1. Share (Savings) 2. Money Market 3. Share Draft (Checking) 4. CDs 5. IRA/Roth IRA/Coverdell Education Savings Accounts The Credit Union does not offer brokered deposits concentration accounts, private banking, trust or asset management services at this time. The Credit Union does offer credit life and disability insurance on loans, GAP insurance and Mechanical Breakdown Protections. G. CONSUMER AND COMMERCIAL LOANS (Low) The Credit Union grants loans to members and business for provident and productive purposes after verifying their identities within BSA requirements. H. LARGE CURRENCY TRANSACTIONS (Moderate) At times, the credit union does receive requests for large currency transactions and monitors these transactions daily for filing CTRs. Frequent CTR filings for or on the behalf of a member will prompt the Credit Union to monitor the applicable member account(s). 5

6 I. STAFF TURNOVER (Moderate) The Credit Union had a high personnel turnover rate the previous year. The turnover rate has moderated this year. J. PERSONS AND ENTITIES (Low) The Credit Union has some nonresident aliens and members from foreign countries. At this time, the Credit Union is not aware of any membership that meets the following criteria: 1. Politically exposed persons 2. Embassy and foreign consulate accounts 3. Cash-Intensive businesses 4. Non-bank financial institutions The Credit Union engages in services for businesses and organizations. All business and organization accounts are domestic entities within our field of membership. To the best of our knowledge their account activity is consistent with the expected activity. K. GEOGRAPHIC LOCATIONS (Low) The Credit Union serves the county of Anoka and the communities of the city of Champlin and Northeast Minneapolis. It has four offices located within this geographic region. The Credit Union has very few members that reside out of the United States. These members are outlined in the list of member accounts to monitor. The Credit Union has no persons or entities that reside in a country subject to OFAC sanctions. Frequent international wire transfers in, or out will prompt the Credit Union to monitor the applicable member account(s). 6

7 III. AML AND TERRORIST FINANCING RISK ASSESSMENT The following activity, when encountered, may warrant additional scrutiny. Closer scrutiny should help to determine whether the activity is suspicious or one for which there does not appear to be a reasonable purpose. 1. Placement Deposits into traditional financial institutions 2. Layering Separating the proceeds of criminal activity from their origin (converting to a monetary instrument) 3. Integration Legitimate transaction to disguise proceeds (sham loan) A. MEMBERS WHO PROVIDE INSUFFICIENT OR SUSPICIOUS INFORMATION (Moderate) FCCU has procedures in place to identify potential members under the guidelines of CIP. However, due to the human contribution to the account opening process, this risk is given a moderate rating. Front line employees have been trained to identify suspicious activity at account opening and thereafter. Examples of these activities include: 1. Unusual or suspicious identification documents that cannot be readily identified, is expired or is invalid 2. A business that may be reluctant to provide complete information about the nature and purpose of its business, anticipated account activity and prior banking relationships B. EFFORTS TO AVOID REPORTING OR RECORDKEEPING REQUIREMENT (Low) Front line employees have been trained to recognize and take action on structured transactions and suspicious activity related to recordkeeping requirements. Examples of these include: 1. Members trying to persuade the employee to not file required reports 7

8 2. A member who is reluctant to provide information needed to file a mandatory report 3. A customer reluctant to provide identification when purchasing negotiable instruments in recordable amounts C. ACTIVITY INCONSISTENT WITH THE MEMBER S BUSINESS (Low) High risk business accounts are identified by the Business Services department. In addition, employees have been made aware of high risk accounts and monitor their transactions for consistency or patterns of sudden change inconsistent with normal activities. D. FOREIGN EXCHANGE TRANSACTIONS (Low) FCCU does not exchange US currency for foreign currency or vice versa. Foreign funds received by check or other similar instrument are put on hold until verified and cleared. IV. RISK ASSESSMENT CONCLUSION Although First Community Credit Union s overall risk is considered to be low for BSA/AML activity, identifying areas of risk is critical to a sound operating environment. It is important to note that FCCU has procedures in place to identify, monitor and address all account activity. The credit union puts great emphasis on written policies and procedures, adequate internal controls and properly trained employees to identify and prevent suspect activity. 8