bank secrecy act · 3/19/2013 · smurfs 1. large, conspicuous amount of cash 3. money is again...
TRANSCRIPT
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Bank Secrecy Act:
Judy Graham, Program Officer
Office of Examination and Insurance
NCUA Update
March 19, 2013
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Overview
• NCUA BSA Regulation
• Most Common violations
Bank Secrecy Act: NCUA Update 2
• Most Common violations
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NCUA Regulation
• 12 C.F.R. 748.2 requires every federally insured credit union to
establish a BSA compliance program that :
– Establishes a system of Internal Controls to ensure ongoing
BSA compliance
– Provides for Independent Testing for BSA compliance by – Provides for Independent Testing for BSA compliance by
the credit union or outside party
– Designates a BSA Compliance Officer responsible for
monitoring day-to-day compliance
– Establishes a BSA Training program for appropriate
employees and volunteers
– Establishes a Customer Identification Program
Bank Secrecy Act: NCUA Update 3
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Most common violations cited
�Training
�Not recent
�Not documented
�Doesn’t cover credit union’s policy & procedures
�No training for Board of Directors
Bank Secrecy Act: NCUA Update 4
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Most common violations cited
• Independent Testing
�Not covering all credit union operations
�Not recent (12 to 18 months)
�Not independent
Bank Secrecy Act: NCUA Update 5
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Most common violations cited
• Internal Controls
�Risk assessment not updated
�Suspicious Activity Monitoring System inadequate
Bank Secrecy Act: NCUA Update 6
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Most common violations cited
• Data Quality Errors in CTR/SAR filings
• Incomplete forms
• Blank narrative on SARs
• E-filing of all BSA forms required as of July 1, 2012
• BSA e-file – www.fincen.gov
Bank Secrecy Act: NCUA Update 7
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Most common violations cited
• Notification of SAR filings to BOD
�Not included in minutes
�The BOD should be aware of suspicious activity
�SAR information is extremely confidential – A
generalized report to BOD is sufficient
Bank Secrecy Act: NCUA Update 8
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Most common violations cited
• Information Sharing (FinCEN 314(a) lists)
�Not checking the lists
�No documentation
• Self certification forms available
• Update point of contact – CU Online
Bank Secrecy Act: NCUA Update 9
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Resources
• www.ncua.gov
– Regulations, Publications and reports
– Bank Secrecy Act
• www.fincen.gov
• www.ffiec.gov
Bank Secrecy Act: NCUA Update 10
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Office Contact Page
Feel free to contact our office with questions or
comments.
Primary Staff: Judy Graham
Program Officer
Bank Secrecy Act: NCUA Update 11
Office Phone: 703-518-6392
Secondary Staff: [email protected]
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Introduction Introduction –– Kent MarcumKent [email protected] (859) [email protected] (859) 341--57185718
� Graduate University of Kentucky� 28 Year Law Enforcement Veteran � IRS Criminal Investigation – Cincinnati (Retired)
– Complex Tax Fraud and Money Laundering Investigations• Organized Crime, Narcotics, Other Illegal Income• Expert Testimony in Switzerland• Expert Testimony in Switzerland• Worked with Scotland Yard and other Foreign Countries
� Training– Local, State, Federal, and Foreign Police Officers
� Current– Attorney– Financial Investigations Consultant– Kenton County Planning Commission– Resident of Kentucky
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Gold SchemeGold Scheme
San San FranciscoFrancisco
New New YorkYorkWire TransferWire Transfer
Wire TransferWire TransferCustoms Customs
HouseHouse
GoldGoldGoldGold
JewelryJewelryStoreStore
GoldGold
MexicoMexico
BelgiumBelgium
GoldGold
GoldGoldWholesaleWholesale
HouseHouse
GoldGold
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Federal StatutesFederal Statutes
Bank Secrecy Act
Money Laundering
Statutes - 14
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Bank Secrecy Act RequirementsBank Secrecy Act Requirements
� CTR
� CTR-C
� CMIR
� FBAR
� MSB
� SAR
� 8300
Statutes - 15
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Currency Transaction ReportCurrency Transaction Report
CTRCTR
� Requires financial institutions to report
– currency transactions
– aggregating over $10,000
– during one business day– during one business day
� Penalties
– 5 years / $250,000 fine
Statutes - 16
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Reporting ProceduresReporting Procedures
� What to file
– Currency Transaction Report (CTR), FINCEN Form 104
CTR
� Where to file
– Filed with IRS, Detroit Computing Center
� When to file
– No later than 15 calendar daysafter transaction
15days
Statutes - 17
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Transaction DefinedTransaction Defined
� Deposit, withdrawal, transfer or exchange of currency
� Loan or extension of credit� Loan or extension of credit
� Purchase or sale of stocks, bond, CD, monetary instrument
Statutes - 18
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Financial InstitutionsFinancial Institutions
31 CFR 103.1131 CFR 103.11
� Banks
� Securities Brokers
� Currency Exchanger
� Issuer of Money Orders
� Transmitter of Funds
� Telegraph Company
� Check Cashing Services
� Casinos
� U.S. Postal Service
Statutes - 19
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Bank Log Bank Log
31 CFR 532531 CFR 5325
• Institution may not issue nor sell the following in amounts of $3000 or more:
- Bank Checks - Cashier’s Checks
- Traveler’s Checks - Money Orders- Traveler’s Checks - Money Orders
Unless
- Is Account Holder at institution
- Furnishes ID needed to cash check
Statutes - 20
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Other OptionsOther Options
� Exemption Lists– Unilateral Business Exemptions
– Exemptions requiring IRS OK– Exemptions requiring IRS OK
– Non-Exemptible
� Structuring (Smurfing)
� Geographical Targeting OrderStatutes - 21
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QuizQuiz
Would a CTR be required IF:
Subject goes to a bank, withdraws Subject goes to a bank, withdraws $11,000 in currency from his bank account. He then goes to another bank and purchases a $5,000 and $6000 cashier’s check.
Statutes - 22
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QuizQuiz
Would a CTR be required IF:
Subject goes to a bank and has $23,000 Subject goes to a bank and has $23,000 wire transferred directly from his account to an account in Ecuador.
Statutes - 23
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CTRCTR--CC
� Requires casinos with annual revenue over $1 million to report
– currency transactions
– aggregating over $10,000– aggregating over $10,000
� Penalties
– 5 years / $250,000 fine
Statutes - 24
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Reporting ProceduresReporting Procedures
� What to file
– Currency Transaction Report - Casinos(CTR-C), FINCEN Form 103
� Where to file
CTR-C
� Where to file
– Filed with IRS, Detroit Computing Center
– Nevada casinos file with the State of Nevada
� When to file
– No later than 15 calendar daysafter transaction
15days
Statutes - 25
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Transaction DefinedTransaction Defined
� Deposit, withdrawal, transfer or exchange of currency
� Payments on credit line with currency� Payments on credit line with currency
� Purchase or redemption of casino chips for currency
Statutes - 26
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QuizQuiz
Would a CTR-C be required to be filed with the federal government IF:
Subject purchases $10,500 in chips at a black jack table in Las Vegas with currency.
Statutes - 27
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QuizQuiz
Would a CTR-C be required IF:
Subject takes $18,000 in chips to the Subject takes $18,000 in chips to the casino cage in Atlantic City and has the money wire transferred to Turkey.
Statutes - 28
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Currency and Monetary Instrument ReportCurrency and Monetary Instrument Report
CMIRCMIR
� Requires individuals to report
– transport of currency & monetary instruments into or out of the US
– aggregating over $10,000– aggregating over $10,000
� Penalties
– 5 years / $250,000 fine
– Forfeiture
Statutes - 29
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Reporting ProceduresReporting Procedures
� What to file
– FINCEN Form 105 (CMIR)
� Where to file
CMIR
� Where to file
– Filed with US Customs Service
� When to file
– At the time of entry intoor departure out ofthe United States Statutes - 30
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QuizQuiz
Would a CMIR be required IF:
Subject carries $82,000 in currency Subject carries $82,000 in currency across the Canadian border in a suitcase.
Statutes - 31
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QuizQuiz
Would a CMIR be required IF:
Subject mails $18,000 in currency of Subject mails $18,000 in currency of legitimate money to his brother in Paris for the purpose of investing in the French stock market.
Statutes - 32
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QuizQuiz
Would a CMIR be required IF:
Subject has $26,000 in currency in his Subject has $26,000 in currency in his possession. He gives $9,000 to his friend, $9,000 to another friend, and keeps $8,000 on his person. Each of the individuals then walk separately across the Mexican border.
Statutes - 33
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Foreign Bank Account ReportForeign Bank Account Report
FBARFBAR
� Requires individuals to report
– interest in foreign accounts
– aggregating over $10,000
– during a calendar year– during a calendar year
� Penalties
– 5 years / $250,000 fine
Statutes - 34
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AggregationAggregation
� Requires aggregation of separate accounts for different countries
Switzerland Account 2,301
Denmark Account 1,007
Grand Cayman Account 7,500
Total Interest 10,808
Statutes - 35
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Reporting ProceduresReporting Procedures
� What to file
– Form TD F 90-22.1
� Where to file
TD F
90-22.1
� Where to file
– Filed with IRS, Detroit Computing Center
� When to file
– No later than June 30 of thesucceeding calendar year
Jun
30
Statutes - 36
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QuizQuiz
Would an FBAR be required IF:
Subject, who is a U.S. citizen, maintains Subject, who is a U.S. citizen, maintains three bank accounts in various foreign countries. In June of this year the balance in account A is $3,000,
the balance in account B is $5,000,
and the balance in account C is $8,000.
Statutes - 37
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QuizQuiz
Would an FBAR be required IF:
Subject, who is a citizen of Mexico but Subject, who is a citizen of Mexico but makes frequent business trips to the U.S., has a secret bank account in the Cayman Islands with an average balance exceeding $100,000.
Statutes - 38
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Suspicious Activity ReportSuspicious Activity Report
SARSAR
� Requires financial institutions to report
– transactions aggregating $5000 or more
– transactions involving potential violations of M/L laws and currency violationsM/L laws and currency violations
– if the institution believes the transaction is suspicious
� Penalties
– 5 years / $250,000 fine
Statutes - 39
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Suspicious Activity Report (SAR)Suspicious Activity Report (SAR)
Financial Institutions:
� Banks
� Securities & Futures
Casinos & Card Clubs� Casinos & Card Clubs
� MSB
� More to follow !
Statutes - 40
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Reporting ProceduresReporting Procedures
� What to file– Suspicious Activity Report -
Treasury Form
� Where to file
TD F
90-22.47
� Where to file– FinCEN, Detroit Computing Center
� When to file– No later than 30 calendar days after
initial detection30
days
Statutes - 41
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QuizQuiz
Would an SAR be required IF:
Subject brings $17,000 in currency to his bank and attempts to deposit the money. bank and attempts to deposit the money. The teller informs him that a CTR will be filed. He deposits only $9,000 and returns the next day with the remaining $8,000 and purchases a cashiers check payable to a bank in Antigua.
Statutes - 42
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QuizQuiz
Would an SAR be required IF:
Subject makes 3 to 4 deposits of currency each week, always in amounts ranging each week, always in amounts ranging from $5,000 to $9,700, into 2 different corporate accounts. The accounts appear to have no legitimate business activity and all the funds are periodically wire transferred to various Caribbean island accounts.
Statutes - 43
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Form 8300Form 8300
� Requires trade or businesses to report
– receipt of over $10,000 in currency or monetary instrument
– aggregated over a 1 year period – aggregated over a 1 year period
� Penalties
– Failure to file
• 5 years / $250,000 fine
– Filing a false form
• 3 years / $250,000 fine
Statutes - 44
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Cash DefinedCash Defined
� Currency
� Coin
� The following in amounts under � The following in amounts under $10,000:
• cashiers checks
• bank drafts
• travelers checks
• money orders
Statutes - 45
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Reporting ProceduresReporting Procedures
� What to file– Form 8300
• Pre 2002 - Access to Form 8300 is generally restricted to IRS (See CD)
Where to file
8300
� Where to file– Filed with IRS, Detroit Computing Center
� When to file– No later than 15 calendar days after transaction
15days Statutes - 46
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Trades & BusinessTrades & Business
� Jewelry Store
� Furniture
� Boat Sales
� Real Estate Brokers
� Construction Contractors
� Insurance Co.
� Aircraft Sales� Real Estate Brokers
� Auto Sales
� Travel Agencies
� Aircraft Sales
� Attorneys
� All other NFI’s
Statutes - 47
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QuizQuiz
Would an 8300 be required IF:
A customer purchased a Corvette for $52,000. He gives the dealership an $8,000 currency He gives the dealership an $8,000 currency down payment in the morning, agrees to pay another $5,000 in a month, and finance the balance. He pays the dealership the $5,000 in currency exactly 33 days from the date of purchase.
Statutes - 48
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QuizQuiz
Would an 8300 be required IF:
Subject purchases a new Master Craft ski boat. He gives the dealership $7,000 in currency on He gives the dealership $7,000 in currency on the day of the sale and signs a promissory note for the balance of $18,000 to be paid in 90 days. When the note comes due the subject writes a personal check to the dealership for $18,000.
Statutes - 49
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Money Service BusinessMoney Service Business
� Requires MSB to file form TD F 90-22.55
– Due by 12/31/01 or within 180 days after the business begins operation
– Requires 2 year update by 12/31 of the second calendar yearcalendar year
– Filed with IRS Detroit Computing Center
– Maintain a list of agents and update annually
� Penalties
– 5 years / Fine
180days
Statutes - 50
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Money Service BusinessMoney Service Business
�Money Transmitters
�Currency Dealers or Exchangers
�Check Cashing Services�Check Cashing Services
� Issuers, Sellers, or Redeemers of Traveler’s Checks, Money Orders, or Stored Value
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Ancient Methods of Moving Money
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Jerusalem Nazareth
Ancient Methods of Moving Money
BrokerBroker
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How the Hawala System WorksHow the Hawala System Works
Worker Dealer
ForeignCurrency
U.S.Dollars
Foreign Dealer
Destroy Records
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OverOver--invoicing Schemeinvoicing Scheme
$1 million Worth of Goods
$2 million Invoice for Goods
$2 million Wire Transfer
$2 million Invoice for Goods
Dealer A Dealer B
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Hawala SchemeHawala Scheme
Clearing HouseDubai, UAE
Corresp.
Then toU.S.
Corresp.Bank
Dealer A Dealer B
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Black Market Peso ExchangeBlack Market Peso Exchange
DrugDealer
PesoBroker Goods
“Legit”Biz Man
DrugDealer’s
Bank
PesoBroker
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SmurfsSmurfs
1. Large, conspicuousamount of cash
3. Money is again divided
into several bank accounts
4. Money wired from
small bank accounts
to one accountat a larger bank2. Large amount is
divided intosmaller amounts
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Black Market Peso ExchangeBlack Market Peso Exchange
DrugDealer Goods
PesoBroker
ML International 10/27/98Mar-03
PesoBroker
“Legit”Biz Man
DrugDealer’s
Bank