Introductory BSA AML Examiner School Manual Palm Springs 2019

The risk-based procedures adopted as part of the CIP must provide specific guidance to employees for opening new accounts. The degree to which customer identity information is verified is to be directly related to the level of risk associated with different account opening scenarios. The risk assessment will also result in documenting the basis for procedures associated with opening additional accounts for existing customers of the bank, and for demonstrating that the Bank has previously established a reasonable belief that it knows the true identity of existing customers. As the relevant factors identified above evolve with the growth of the Bank and its organizational complexity, and changes occur, the risks associated with these changes will be assessed on an ongoing basis. The CIP will be adjusted accordingly, and procedures will be revised based on changing levels of risk. Definitions For the purpose of this policy, the following terms will have the meanings stated below: • Account – Refers to a formal banking relationship established to provide or engage in services, dealings, or other financial transactions including a deposit account, a transaction or asset account, a credit account, or other extension of credit. Account also refers to a relationship established to provide a safe deposit box or other safe-keeping services, or cash management, custodian, and trust services. Account does not include: o A product or service where a formal banking relationship is not established with a person; o An account that the bank acquires through an acquisition, merger, purchase of assets, or assumption of liabilities; or o An account opened for the purpose of participating in an employee benefit plan established under the Employee Retirement Income Security Act of 1974. • Customer – Refers to a person that opens a new account; and also an individual who opens a new account for: o An individual who lacks legal capacity, such as a minor; or o An entity that is not a legal person (not a separate legal entity), such as a civic club. Customer does not include: o A financial institution regulated by a Federal functional regulator or a bank regulated by a state bank regulator; o A person described in 31 CFR 103.22(d)(2)(ii)-(iv) that is eligible to be granted a Phase I exemption from currency transaction reporting (i.e., governmental agencies and instrumentalities, and companies that are publicly traded described in the cited paragraph); or o A person that has an existing account with the bank, provided that the bank has a reasonable belief that it knows the true identity of the person. • U.S. Person – Refers to a person who is: o A United States citizen; or o A person other than an individual (such as a corporation, partnership, or trust), that is established or organized under the laws of a State or the United States. Non-U.S. person means a person that is not a U.S. person. Customer Identification Program The first and foremost objective in Anytown Community Bank’s BSA/AML and OFAC initiatives starts with identifying the parties to each account or other financial products and services provided to the customer on an ongoing basis. CIP regulatory provisions require a written program which details how the institution (1) identifies and verifies persons who open new accounts; (2) maintains formal record-keeping to document this process; and (3) cross-checks these activities with government lists. The CIP sub-policy and associated procedures are established to ensure that proper identification is obtained from an