Bank AML Monitoring and Bank AML Monitoring and Record Keeping ProgramRecord Keeping Program

Office of Technical AssistanceOffice of Technical Assistance

James WrightJames Wright

Risk BasedRisk Based

Begins with a good Know Your Customer Begins with a good Know Your Customer ProgramProgram– Customer IDCustomer ID– Risk Rating of CustomerRisk Rating of Customer

Risk FactorsRisk Factors

CustomerCustomer

BusinessesBusinesses

CountriesCountries

High RiskHigh Risk

Visit high risk corporate accounts within Visit high risk corporate accounts within one monthone month

Political Exposed PersonsPolitical Exposed Persons

Perform source of wealth inquiryPerform source of wealth inquiry

Yearly ReportsYearly Reports

Annually update re-approve high risk Annually update re-approve high risk accountsaccounts

Low risk accountsLow risk accounts

Monitored yearly in order to decide Monitored yearly in order to decide whether they remain classified as low riskwhether they remain classified as low risk

Factors:Factors:– Persistent exceptions identified in the Persistent exceptions identified in the

monitoring and more than one change in monitoring and more than one change in transaction profiletransaction profile

– Change in activity or ownershipChange in activity or ownership

Customer ChangesCustomer Changes

Reporting information internally of any Reporting information internally of any activity or customer behavior that is activity or customer behavior that is inconsistent with what is the known or inconsistent with what is the known or expectedexpected

Customer ProfileCustomer Profile

Essential InformationEssential Information

TransactionTransaction

Develop a profile of the customers Develop a profile of the customers anticipated transactions and use of bank anticipated transactions and use of bank services per monthservices per month

Risk AssessmentRisk Assessment

1.Is the customer’s core business defined 1.Is the customer’s core business defined as high risk?as high risk?

2.Is the customer located in a high risk 2.Is the customer located in a high risk geography?geography?

Based on number 2 and the bank products Based on number 2 and the bank products we expect customer to use, does the we expect customer to use, does the customer represent a high risk?customer represent a high risk?

Risk AssessmentRisk Assessment

AnswersAnswers

– No, products and geographies dealt with are No, products and geographies dealt with are consistent with normal business activityconsistent with normal business activity

– Yes, Yes, – (management will approve account opening (management will approve account opening

subject to high risk account monitoring)subject to high risk account monitoring)

ReportsReports

MonthlyMonthly– Monitor non-cash individual transactions for Monitor non-cash individual transactions for

the monththe month– Aggregate cash transactions for the monthAggregate cash transactions for the month– Aggregate cash and non cash transactions for Aggregate cash and non cash transactions for

the monththe month

Quarterly ReportsQuarterly Reports

Review of High risk accounts and submit Review of High risk accounts and submit the reports to the compliance officerthe reports to the compliance officer

Review politically exposed persons Review politically exposed persons account activity and document in a account activity and document in a standard formstandard form

Record KeepingRecord Keeping

PurposePurpose

Aid Law EnforcementAid Law Enforcement

Aid in Analysis (banks and examiners)Aid in Analysis (banks and examiners)

Types of RecordsTypes of Records

CustomerCustomer

TransactionsTransactions

Period of TimePeriod of Time

Five yearsFive years