Introductory BSA/AML Examiner School, Atlanta, CA

Bank of Smithville USA

Page 16

over the two-week alert period. If the amounts of debits and corresponding credits are within a certain parameter, an alert is generated. For business customers, some of these alerts are noted as behavioral and the customer’s parameters can be adjusted individually to determine what is normal or abnormal. During the review, issues were noted for certain types of activity that did not generate reviewable alerts. If a large one-sided transaction occurs without any corresponding activity on the opposite side of the ledger, an alert is not generated. One situation was identified that included approximately 10 wire transfers from Tanzania and Dubai totaling $751,000 that did not alert due to the lack of outgoing activity. If large incoming or outgoing activity occurs but minimal activity is noted on the opposite side, an alert will generate; however, the score is generally less than 75 and it is not included in the alerts targeted for review. Additionally, larger cash withdrawals do not always generate alerts. This issue was noted for commercial deposit accounts with significant outgoing check volumes that Verafin had previously resolved or for which behavioral adjustments had been made, suppressing new alerts. In order to resolve these issues, some additional review processes should be implemented. Additional reviews of wire transfer logs, with particular focus on international transfers, should be conducted. For larger cash withdrawals that could be suppressed by the lack of Verafin alert generation, a review of large CTR submissions for outgoing cash should identify those items for further review. BSA Officer Marks stated that additional procedures have been implemented to review CTRs with large outgoing cash, and that she will examine the options for additional review of wire transfers. Exempting of Customers from CTR Reporting Requirements The review noted one customer designated as a Phase II exempt entity that operates an armored car service. This customer was acquired as part of the merger with HILL Bank. The business activities of this customer are ineligible for exemption from CTR reporting. Management should revoke the exemption and contact FinCEN to obtain a back filing determination. During the examination, BSA Officer Marks revoked the exemption and contacted FinCEN, receiving notification that CTRs should be submitted for qualifying activity between August 4, 20XX and August 3, 20XX. On September 6, 20XX a file consisting of 87 CTRs was forwarded to FinCEN, complying with the back filing requirements. BSA Staffing BSA Officer Marks and her staff appear competent and dedicated; however, the lack of resources, along with the two 20XX mergers and system changes have resulted in the backlogs and other issues noted above. Staffing shortfalls appear to have been evident in mid-2015, when the BSA department consisted of three individuals despite total assets exceeding $8.5 billion. By year-end 2015, one additional position was added to the department. Management initially planned to supplement the department with the 10 BSA staff members from the two upcoming