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#1636934 - 12/08/11 04:39 PM TPPP Audit
husker14 Offline
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Joined: Aug 2005
Posts: 50
We are a community bank on the west coast and are in the middle of a FDIC BSA audit. The examiners are reviewing our Third Party Payment Processing procedures. During that review we were advised that we had not identified all TPPPs because we had not included the corner grocery stores that collect payments for utility companies. It was our understanding that the definition of a TPPP was processing payments on behalf of another merchant (I would not classify a utlity as a merchant). Is this a consistent assessment by FDIC in your audits of TPPPs. What other things are examiners commenting on with respect to TPPPs.

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#1636997 - 12/08/11 05:31 PM Re: TPPP Audit husker14
rlcarey Offline
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Galveston, TX
I think they are reaching again.
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#1637211 - 12/08/11 10:10 PM Re: TPPP Audit rlcarey
devsfan Offline
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Joined: Jun 2004
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We also had a recent exam by the FDIC and the examiner was also interested in TPPPs. I think if you follow the FFIEC exam procedures insofar as identifying them, conducting the EDD included in the exam procedures, etc you should be fine. I cannot find any mention of utility payments as making one a TPPP so I would ask the examiner for a specific reference where it so states.

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#1638332 - 12/13/11 04:30 PM Re: TPPP Audit devsfan
WonderWoman Offline
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gone fishin'
I just received a phone call from one of my examiners. husker - are you in Northern California by chance?

He asked my opinion on this & I told him it was a bunch of baloney (in much more colorful terms). Everything in BSA should be risk rated & in my opinion, if TPPPs stretch that far, they would be a seriously low risk.

That being said, I'm doing some research & talking to the powers that be at FDIC. I'm not reading anywhere that grocery stores, & in the example the examiner gave me, companies that process medical payments, fall into this.

I do have a procedure where if a grocery store takes PG&E payments I gather the contract, similar to an MSB w/Western Union.
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#1638377 - 12/13/11 05:06 PM Re: TPPP Audit WonderWoman
WonderWoman Offline
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gone fishin'
Husker, I PM'd you.
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#1638378 - 12/13/11 05:10 PM Re: TPPP Audit WonderWoman
WonderWoman Offline
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gone fishin'
I posed this scenario & received agreement from FDIC. I would chat with your examiner again.

The guidance states: Payment processors typically process payments by creating and depositing remotely created checks (RCCs)—often referred to as "Demand Drafts"—or by originating Automated Clearing House (ACH) debits on behalf of their merchant customers.

This is not how grocery stores or medical payment locations work. (at least the ones I & most of our local banks around here have) They receive checks from the customer and deposit to the respective business. They do not create checks on behalf of the customer. I believe that is the true intent of the guidance and exam manual – looking for businesses that are originating checks/ACHs for the customer. Not looking for businesses that are simply a drop box for payments.
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#1638469 - 12/13/11 07:17 PM Re: TPPP Audit WonderWoman
Princess Romeo Offline

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I guess I have to put my 2cents in here, but HOW IN THE HECK would accepting local utility payments equate to money laundering?

I mean...., really?

If this is the kind of nonsense examiners are going to be sniffing after, what's the point of having a RISK BASED PROGRAM????

(not as)newbsa, I probably would have enjoyed your colorful metaphors on this.
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#1638624 - 12/13/11 10:31 PM Re: TPPP Audit Princess Romeo
WonderWoman Offline
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gone fishin'
I agree Princess that it is unfortunate some of the tactics some examiners have taken. (our Compliance exams have been less than fun of late)

But I think this was a simple case of a misunderstanding. After I explained the specifics on how these businesses work, they were completely open to the idea and enjoyed the clarification.

I do have the luxury of having awesome BSA examiners. My only hope is that husker14 has read this post & his/her PMs smile
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#1638626 - 12/13/11 10:33 PM Re: TPPP Audit Princess Romeo
DebL Offline
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Joined: Jan 2007
Posts: 314
CA
:::rant warning::::

Our most recent FDIC BSA exam made it very clear that saying something is risk based is irrelevant. They don't care about thorough evaluations of risk which include documentation, they want everything this lumped into one "box" to make it easier on them. Heaven help you if you don't agree with the BSA examiner who has 15 minutes of experience in her job.

::::rant over::::
Last edited by BSAdiva; 12/13/11 10:34 PM.
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#1638931 - 12/14/11 05:41 PM Re: TPPP Audit DebL
rlcarey Offline
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Galveston, TX
Heaven help you if you don't agree with the BSA examiner who has 15 minutes of experience in her job.


That is why there is an ombudsman. Any repeat violations of the BSA is an immediate C&D on the next visit. False findings in exam reports are very dangerous.
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#1639101 - 12/14/11 09:24 PM Re: TPPP Audit rlcarey
Becky Offline
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Dallas, Texas
Sometimes you have to slap yourself for asking the question. I know I am right now.......had the quandry a few months ago..."which customers are TPPPs?"......no one could agree who was, and more importantly, who wasn't a TPPP. So found a consultant, very qualified, and commissioned him to draft a written opinion for me. And he did. And now property management, collection agencies, employee benefit administrators, factoring companies, payroll companies & mortgage servicers, are TPPPs, in addition to the ususal suspects of merchant card processing. Ugh!

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