Bank Secrecy Act Flashcards
What is a professional service provider?
These are 3rd parties that control client funds and are therefore acting as intermediaries between bank and their client.
What are some examples of PSPs?
- lawyers
- accountant
- doctors
- real estate brokers
What are nongovernmental organizations and charities?
Any nonprofit organization that is independent from a government.
They include:
- Red Cross
- churches
- research groups
- political lobbyist groups
What are some examples of cash intensive businesses?
- convenience stores
- restaurants
- liquor stores
- cigarette distributors
- privately owned ATMs
- vending machine operations
- parking garages
When should risk profiles be adjusted?
When customer activity is inconsistent with a customer profile.
When must a SAR be filed?
30 calendar days after initial detection
True or False
CIP and beneficial ownership are applied the same.
False
Beneficial ownership must be collected every time a legal entity customer opens a new account.
What is an account?
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 card account or other extension of credit. An account also includes a relationship established to provide a safety deposit box or other safekeeping service or to provide cash management, custodian, or trust services.
Which products/services are not considered accounts?
Products or services for which a formal banking relationship is not generally established with a person such as check cashing, wire transfer, or sale of a check or money order. An account does not include any account that the bank acquires or accounts opened to participate in an employee benefit plan.
True or False
Beneficial ownership applies to renewals of CDs and loans.
True
However, FinCEN made permanent exception for automatic rollovers or renewals of CD accounts, loans and safe deposit boxes.
What is a legal entity customer per beneficial ownership requirements?
The defining trait is an organization that is created as business entity by being a general partnership and or registering with the Secretary of State business registration office as a business that is separate from the individual running it.
What are examples of legal entities for beneficial ownership requirements?
- corporation
- limited liability companies
- limited partnerships
- general partnerships
- business trusts created by state office filing
What are NOT examples of legal entities under beneficial ownership rules?
- natural person
- sole proprietorships
- unincorporated associations
- estates
- family/tax/personal trusts
Who must be identified under ownership prong?
- 0 to 4 natural persons
- natural person who owns at least 25% of the entity, directly or indirectly
Who must be identified under control prong?
- 1 person
- natural person who controls or manages the entity
An individual with significant responsibility for managing the legal entity customer (CEO, CFO, COO, managing member, general partner, president, Vice President or treasurer).
True or False
Non profit legal entities are only required to collect information related to the control prong.
True
However, a club or unincorporated association or other group that is not a general partnership nor required to register with the state as a business, is not a legal entity and are fully exempt from the rule. Therefore, no information needs o be taken related to either prong.
What information must a bank collect for owners under beneficial ownership rule?
- name and title of individual
- name and address of the business or personal address
- date of birth
- social security number for US citizens
- SSN, passport number and country of issuance or other similar information for non citizens
True or False
CIP and CDD requirements are all the same.
False
For CDD, bank may accept copies of verification documents instead of the actual ID.
True or False
The beneficial ownership requirements only apply at banks
False
Form must be completed by the person opening a new account on behalf of a legal entity with any of the following
- bank or credit union
- broker or dealer in securities
- mutual fund
- future commissions merchant
- introducer broker in commodities
True or False
A bank may rely on the information contained in the certification form during recertification.
True
The bank may rely on the information contained in the certification form to fulfill the beneficial ownership requirement for subsequent accounts, and subsequent renewals of loan or CD accounts, provided the legal entity customers representative decertified in writing that such information is up to date and accurate at the time each subsequent account is opened or at the time of each subsequent renewal of a loan or CD account.
What are record requirements for beneficial ownership documentation?
Identifying information including the certification form must be retained for 5 years after an account is closed and verification documents must be kept for 5 years after the record is made. Those records will include a description of the documents that were used for verification,documentation of any non documentary methods used to verify the beneficial owners identity and any discrepancies between the information presented and information verified. The record will also need to contain how the bank resolved any discrepancies.
What are the 5 pillars of BSA?
- written program with a system of internal controls
- independent testing
- BSA officer
- training
- customer due diligence
A BSA risk assessment must consider the following:
- products and services
- customers and entities
- geographies served
