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#1139188 - 03/03/09 08:25 PM addressing correspondent accounts& private banking
nemsi Offline
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The findings from our last independent audit stated that our policy should be amended to address special due diligence for correspondent accounts and private banking accounts. We are a small financial institution located in small town. We offer no private banking relationship, have no private banking department. As for correspondent accounts we do have accounts with Silverton Bank, etc. but we offer no correspondent accounts to our customers. I don't understand what we should be adding to our policy. Has anybody else addressed similar findings? Can someone help me understand what I should be looking at? Or point me in the right direction.

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BSA/AML/CIP/OFAC Forum
#1139198 - 03/03/09 08:33 PM Re: addressing correspondent accounts& private banking nemsi
Hrothgar Geiger Offline
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Section 326 of the USA PATRIOT Act, Final Rule.

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#1139235 - 03/03/09 09:04 PM Re: addressing correspondent accounts& private banking Hrothgar Geiger
Compliance Lifer Offline
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It's actually section 312 of the final rule.

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#1139259 - 03/03/09 09:20 PM Re: addressing correspondent accounts& private banking nemsi
Elwood P. Dowd Offline
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The BSA/AML Manual addresses both issues in detail and its discussion of private banking pursuant to section 312 focuses on really high end clients, not just customers who are served by someone called a "private banker" who sucks up to them at the branch. The Manual indicates they require special attention when they are products and services offered by your bank. If you do not offer either, then the most your policy could say is that you do not offer them.

Sometimes auditors and examiners are like boys on their first dates: They can't think of anything to say, so they say something ridiculous. Your question should have been raised before you received your written report, but I suggest you respond in writing and ask for specific direction as to what is necessary and why it is necessary. It is important to indicate that you flatly disagree. Regulators often use reports of independent examinations as the springboard for their examination. You don't want them to get all excited about something that is simply irrelevant.

My favorite similar example was in connection with a criticism in a regulatory examination that the bank's policy did not address international shipments of currency. This was a community bank located in eastern Kentucky and, in its 108 year history, had never had an international shipment of currency. It takes an astute observer to come up with criticisms like that. wink
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#1139266 - 03/03/09 09:23 PM Re: addressing correspondent accounts& private banking Compliance Lifer
nemsi Offline
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Yes, I read this bulletin but it states "Section 312 requires U.S. financial institutions to establish due-diligence policies, proecedure, and controls reasonably designed to detect and report money laundering through correspondent accounts of foreign banks and private banking accounts of non-US citizens."
We have no Private banking accounts- US citizen or non US citizen! We have no correspondent accounts at foreign banks. What am I missing that I need to address in my BSA policy?

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#1139300 - 03/03/09 09:41 PM Re: addressing correspondent accounts& private banking Compliance Lifer
Hrothgar Geiger Offline
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Originally Posted By: Compliance Lifer
It's actually section 312 of the final rule.


oh, you're right... thanks.

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#1139307 - 03/03/09 09:44 PM Re: addressing correspondent accounts& private banking Hrothgar Geiger
WonderWoman Offline
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I simply state "we have no private banking accounts and we have no correspondent accounts at foreign banks"
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#1139381 - 03/03/09 10:57 PM Re: addressing correspondent accounts& private banking WonderWoman
Hrothgar Geiger Offline
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actually it would be 'we hold no correspondent accounts for foreign banks'. The way you worded it would apply to correspondent accounts that your bank has on a foreign bank's books.

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#1139429 - 03/04/09 11:24 AM Re: addressing correspondent accounts& private banking WonderWoman
Elwood P. Dowd Offline
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This is only an issue if you offer correspondent accounts to other banks (domestic or foreign) as one of your products or services. Being a respondent bank; i.e. having correspondent accounts with other domestic banks is not an issue.

We do not offer correspondent or private banking services.
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#1139492 - 03/04/09 01:49 PM Re: addressing correspondent accounts& private banking Elwood P. Dowd
nemsi Offline
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Thanks to everybody for the responses. Bankers Online is by far the most valuable tool I have- not just "Threads" but the entire site!! Thanks again.

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#1139729 - 03/04/09 04:54 PM Re: addressing correspondent accounts& private banking Elwood P. Dowd
WonderWoman Offline
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gone fishin'
Originally Posted By: Ken_Pegasus


We do not offer correspondent or private banking services.



My actual wording in our Risk Assessment states We currently do not offer trust services, international or correspondent banking services.


Should I add "private banking services" to the statement to clarify further?
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#1139820 - 03/04/09 05:44 PM Re: addressing correspondent accounts& private banking WonderWoman
nemsi Offline
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I have basically the same wording in my risk assessment as well, that was not sufficient for this particular auditor.

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#1140243 - 03/05/09 01:23 AM Re: addressing correspondent accounts& private banking nemsi
Elwood P. Dowd Offline
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In an attempt to clarify, I personally do not think it is necessary to mention things you do not do in your policy. The Hat Creek Cattle Company's sign in "Lonesome Dove" said, "We don't rent pigs." That's the intellectual equivalent. There is no point in having a policy about something you do not do.

If you are going to try to please an examiner or auditor that's fine, just use whatever language the individual wants - it does not make a difference.
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