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High Risk Account Concerns

Question: We recently opened an account for a customer, a charity that handles large transactions by check and wire. We were careful to identify the customer and also to confirm that the customer is not on the OFAC list. When opening the account, the customer told us that the previous bank had closed their account but would not tell us

Because of the concerns we identified when opening the account, we rated the account as high risk and watch it closely. We have noticed that some of the checks and wires go to other organizations that may have connections to terrorist organizations. What should we do next?

Answer: First, congratulations on following good customer identification procedures and having a risk rating for the customer. The fact that you have this customer flagged indicates that you have a program that works.

Now for the problem. This is where Section 314(b) is useful. You have specific concerns that the customer may have connections with terrorist organizations but have been unable to find anything firm on this. Given the work that you have already done and the fact that there has not been any clearly suspicious behavior, your best approach might be to contact the bank that closed the customer's account and find out their reasons. If both your institution and the other have filed to be Section 314(b) information sharers, you can discuss your concerns about this customer with the other bank.

Copyright © 2005 Compliance Action. Originally appeared in Compliance Action, Vol. 10, No. 4, 4/05

First published on 04/01/2005

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