Anti-Money Laundering (AML) Training

 Anti-Money Laundering (AML) Training

This training aims to provide information about the legal framework for Anti-Money Laundering compliance and identify suspicious activities in the context of a Money Service Business.


Index

  • What is a Money Service Business?
  • The Bank Secrecy Act (BSA)
  • Reporting obligations
  • The USA PATRIOT Act
  • What is money laundering?
  • Money laundering process
  • Red flags/ How to identify suspicious activities?
  • Know Your Customer (KYC) Policy
  • Consumer Fraud-Awareness
  • Privacy Policy
  • FinCEN
  • OFAC
  • Politically Exposed Persons (PEPs) list
  • CFPB Requirements
  • Test your knowledge.


What is a Money Service Business (MSB)?

A Money Service Business (MSB) is any business that transmit money such as:

  • Check casher.
  • Money order issuers or redeemer.
  • Bill payment establishment.
  • Currency exchange establishment.
  • Money transmitter.



The Bank Secrecy Act (BSA) was originally passed by the congress of the United States in 1970 and as a Money Service Business needs to comply with the following aspects of this regulation:

  1. Transaction monitoring.
  2. Maintain recordkeeping for a 5-year period.
  3. Reporting.
  4. OFAC.
  5. FINCEN Registration.


Reporting Obligations:

As a Money Service Business (MSB) and in order to comply with BSA/AML regulations, the company, is required to create certain reports. The most common ones are:

  • SAR: Suspicious Activity Report.
  • CTR: Currency Transaction Report.

Suspicious Activity Report (SAR)

  • This report is regarding suspicious or potentially suspicious activity.
  • It is created when such unusual activity involves $2,000 (Two thousand dollars) or more.
  • A SAR is confidential, and it has to be presented to FINCEN in less than (Thirty days) 30 days after the suspicious activity arouses.

Currency Transaction Report (CTR)

  • A Currency Transaction Report (CTR), or FINCEN form 112 is a report that US financial institution are required to file for each deposit, withdrawal, exchange of currency, or other payment or transfers, by through, or to the financial institution.
  • Involves transactions with an acumulated of more than 10k (Ten thousand dollars) in a same day per sender or beneficiary. It has to be presented to FINCEN in less than 15 days after the transaction is conducted.

The USA PATRIOT Act. this regulation requires to all Money Service Business to:

  1. Establish an AML Program.
  2. To maintain a confidential communication system between the financial services industry and the regulators.
  3. Create "Know Your Customer" policies and procedures.

Know Your Customer (KYC) policy.

Acceptable form of identification:

  • Driver's license.
  • Alien resident card.
  • U.S. Government or state-issued identification card, e.g., non-driver's license.
  • Passport.
  • Mexican credential electoral (Voter ID)
  • Mexican Matricula Consular (Consular ID)
  • Documento Unico de Identidad (DUI from El Salvador)
  • Cedula Ciudadana (Foreign Federal ID)

What is money laundering?

  • Money laundering is the process of concealing the source of money obtained by illicit means.
  • Converting, transferring, acquiring, possessing or using property, knowing at the time of receipt, that it was derived from a criminal offense or from participation in a crime.

Money laundering process:

  1. Placement: is the physical disposal of cash.
  2. Layering: carrying out complex layers of financial transactions to separate the illicit proceeds from their source and disguise the audit trail.
  3. Integration: is to make the wealth derived from the illicit proceeds appear legitimate.


Red flags - How to identify suspicious activities?
  • A customer uses different names or other personal information.
  • A customer sends transactions for amounts below the limit.
  • A customer structures large transaction.
  • Two or more individuals working together.
Consumer Fraud-Awareness
  • The Company has designed an alert system in order to comply with the 1021 supervisory memorandum of the state of Texas and protect customers from fraud.
Privacy Policy
The company in compliance with The Dodd Frank Wall Street Reform and Consumer Financial Protection Act- Dodd-Frank Act.
  • We require sensitive and private information of our agents and customers in order to satisfy the due diligence needs generated by providing the money transfer service.
  • The company does not share any third-party private information.

FinCEN
  • The Financial Crimes Enforcement Network (or FinCEN) is a bureau of United States of Deparment of Treasure.
  • Collect and analyzes information about financial transactions in order to combat money laundering, terrorist financiers, and other financial crimes.
  • FinCEN ensures that all money service business comply with AML/BSA regulations, monitors report like SAR and CTR, identifies financial crime high risk areas.
  • FinCEN gather, analyses and exchanges information to fight money laundering and other kinds of financial crimes.
OFAC
  • The Office of Foreign Assets Control (OFAC) is an agency of the United States department of the treasure under the auspices of the under secretary of the treasury for terrorism and financial intelligence.
  • The company has established procedures to ensure compliance with OFAC, in case our automated system detects a possible match with the OFAC list an enhanced due diligence process is conducted the costumer is requested for a copy of a valid identification and/or place and of birth.
  • If we detect and confirm and exact match with a person in the OFAC list we can't cancel or release the transaction until the coincidence are ruled out.

Politically Exposed Person (PEPs) list
  • Politically Exposed Person or PEPs is an individual who is or has been entrusted with prominent public positions in a foreign state.
  • This list can include heads of state or of government, senior politicians, senior national or local government, judicial or military official, etc.
  • Even though is not considered illegal to do business with these parties there is certain risk involved that every financial institution should mitigate.


Who is the CFPB?
The  Consumer Financial Protection Bureau aim to make consumer financial markets work for consumers, responsible providers, and the economy as a whole. They protect consumers from unfair, deceptive, or abusive practices and take action againt companies that break the law.
The bureau also people with the information, steps, and tools that they need to make smart financial decisions.

CFPB Requirements
The CFPB (Consumer Financial Protection Bureau) requires that all Money Transmitters must provide the terms of the service to the customer. the following information must be verified before completing the transaction.
  1. Transfers amount.
  2. Transfers fee.
  3. Total amount of the transaction.
  4. Total amount to be paid to beneficiary.
  5. Rate exchange.
  • It is also obligatory to inform all the costumer that he or she will receive a pre-receipt with all the information previously provided which needs to be accept in order to continue with the transaction.
  • Under the CFPB rules, the costumer has the right to cancel a transaction for a full refund within 30 minutes of payment unless the funds have been paid to the beneficiary or deposited.


Test your knowledge.
Check If You’ve Really Understood Your Studies: https://forms.gle/35B45vGt9afPNzTx7

1. Any Money Service Business (MSB) must comply with The Bank Secrecy Act (BSA) and The USA PATRIOT Act regulations.

    A) True B) False

2. To comply with The USA PATRIOT Act regulations is enough with create polices to Know the Customer (KYC). 

     A) True B) False

3. OFAC is a list of names of criminals detected by the government who should not be provided with money transfer services.

    A) True B) False

4.The BANK SECRECY ACT (BSA/AML) states that we must keep all documents related to transactions for 5 years.

     A) True B) False

5. The money transactions from 20 or 30 dollars should not be monitored because they are small amounts.

   A) True B) False

6. Money that comes from illegal means is often considered "dirty money" and the task of those who launder this money is to make it look clean, i.e. legal.

     A) True B) False

7. if a money transaction is identified like a OFAC list and the client don’t want to her or him ID then we must canceler the transaction.

     A) True B) False

8. If a money transaction is identified like a Politically Exposed Person or PEP list and the customer is identify is verified, then we must canceler the transaction.
 
 A) True B) False

9. If you identify any suspicious activity in a transaction then you must make a report to compliance department.
     
 A) True B) False

10.FinCEN is the U.S. Department of the Treasury's Financial Crimes Enforcement Network that collects and analyzes information on financial transactions to combat money laundering, terrorist financing, and other domestic and international financial crimes.
    
 A) True B) False

Links of interest:
For BSA regulatory questions and interpretations of BSA regulations, call the FinCEN Regulatory Helpline:1-800-949-2732
For Financial Institution Hotline – to report terrorism-related financial activity to FinCEN, call:1-866-556-3974 To order free MSB materials.




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