The following material identifies potential violations of the Bank Secrecy Act regulations. Once a violation of the regulations is detected, a bank examiner determines whether, under the circumstance, it is substantive or technical.
Descriptions of requirements are not substitutes for specific provisions of law, and the violating practices presented do not necessarily reflect the most common violations observed during past examinations. This is a reference guide to help focus on important issues.
Requirement
Violating Practice
12 C.F.R.
21.21(b)
Written compliance program that is approved by board and noted in minutes
Compliance program not in writing. Compliance program not approved by the bank’s board of directors. Lack of or inadequate compliance program.
21.21(c)(1)
Program must provide system of internal controls for ongoing compliance
Lack of or inadequate system of internal controls to ensure accurate reporting of currency transaction in excess of $10, 000. Lack of review procedures prior to filing CTRs.
21.21(c)(2)
Program must provide for independent testing for compliance.
Lack or inadequate procedures for testing for reportable transactions and accurate CTR filings.
21.21(c)(3)
Program must designate individual(s) responsible for day-to-day compliance.
No employee designated responsibility for monitoring compliance.
21.21(c)(4)
Program must provide for training of personnel.
Lack of or inadequate training program for personnel. Training sessions not documented.
Citation
31 C.F.R.
103.22(b)(1)
File report (CTR) for each deposit, withdrawal, exchange of currency or other payment of transfer involving transaction in currency of more than $10,000.
Failure to file CTR on covered transactions. Failure to report multiple currency transactions totaling more than $10,000 in one business day.
103.22(d)(2)
Allowable exemptions from the Phase I Category: Domestic Banks; Government Departments and Agencies; Entities Exercising Governmental Authority; and Certain Publicly-Traded Entities and Subsidiaries.
Ineligible account exempted.
103.22(d)2
Allowable exemption under Phase II Category: Non-Listed Businesses; Businesses that Use Cash Simply for Payroll purposes
Designation of exempt person must be made separately by each bank (parent bank holding company or one of its bank subsidiaries may designate on behalf of all bank subsidiaries).
103.22(d)3,4 and 5
Exempt customers by preparing a “Designation of Exempt Person” form (TD F 90-22.53); must maintain periodic reviews and filings for “exempt” persons in the Phase II Category. Initial designation of a bank, government or listed business as an “exempt person” does not require extension filings.
Failure to prepare TD F 90-22.53 form. Failure to review and verify at least annually information supporting each Phase II exemption designation. Failure of bank to file an extension of Phase II exempt person designations biennially and with appropriate information certifying the bank’s system of monitoring currency transactions and information about any change in control of an exempt person, by March 15.
103.22(d)6
(viii)
May not exempt businesses engaged primarily in ineligible business activities listed by regulation or specified by FinCEN.
Exempting an ineligible business activity.
103.22(d)9
Bank must monitor all suspicious activities of both Phase I and II exemptions and maintain a monitoring system for Phase II exemptions.
Failure to monitor suspicious activities or establish and maintain monitoring systems.
103.23(a) & (b)
File report (CMIR) for each: 1) person who physically transports, mails, or ships; 2)person who causes to be physically transported, mailed, or shipped; 3)person who attempts to physically transport, mail or ship; or 4)person who attempts to cause to be physically transported, mailed or shipped currency or other monetary instrument in an aggregate of more than $10,000 to or from any place outside the U.S. and file (CMIR) on receipt of any such transaction on which a report has not been filed as specified above.
Failure to file CMIR on covered transactions. (NOTE: filing of CTR does not provide relief from CMIR filing requirements).
103.24
File report of foreign financial accounts (Form 90-22.1) annually before June 30 where bank has a financial interest in or authority over a bank, securities or other account in a foreign country.
Failure to file Form 90-22.1 where bank has reportable account relationship.
103.26
File report pursuant to geographic targeting order issued by Treasury.
Failure to comply with order.
103.27(a)(1)
A CTR must be filed within 15 days of the date of the transaction.
Failure to file a CTR within 15 days of the date of reportable transaction.
103.27(a)(3)
A copy of each CTR filed must be retained for 5 years.
Failure to retain a copy of a CTR that was filed. Failure to retain copies of filed CTRs for 5 years.
103.27(d)
Currency Transaction Reports must be on prescribed forms. All information on the forms shall be furnished.
Use of an outdated CTR form to report a currency transaction. Omission of required information or erroneous information on form (except for ID information, See §103.28).
103.28
Must verify and record the identity and address of the person presenting a reportable transaction, as well as, the identity, account number, social security or TIN of the entity whose account is to be effected.
Failure to verify identification of customer. Inappropriate documentation used for verification of ID. e.g. comment such as “know customer”, etc.
103.29(a)
Must obtain and maintain records of each sale of bank check or draft, cashier’s check, money order or traveler’s check for $3,000 or more in currency. Records must contain specified identifying information on accountholder and non-accountholder purchasers.
Sale of specified monetary instruments for cash without obtaining identifying information. Failure to record multiple purchases.
103.33(a)
Must retain original, microfilm record or other reproduction of each extension of credit in an amount in excess of $10,000 (except those secured by real estate).
Records must contain name and address of person to whom credit is extended, amount, nature or purpose and date.
Failure to maintain record of extension of credit.
Omission of required information in record or insufficient description of statement of purpose.
103.33(b)
Retain record of advice, request or instruction received or given for any transaction of more than $10,000 to or from any person, account or place outside the United States.
Failure to maintain record of advice, request or instruction.
31. C.F.R.
103.33(c)
Retain record of each advice, request or instruction given to another financial institution or person located within or without the United States regarding transaction of more than $10,000 to a person, account or place outside of the U.S.
Failure to maintain a record of advice, request or instruction.
103.34(a)(1)
Within 30 days of opening a customer deposit or share account or purchasing a CD, secure and maintain customer’s TIN or if reasonable effort has been unsuccessful, maintain a list of such customers.
Failure to secure and maintain TIN of customer within 30 days from the date of certain specified transactions.
103.34(b)
Retain either the original or a copy of other specified financial transaction records
Failure to retain copy of the specified documents and or financial transaction records.