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#1766495 - 12/12/12 02:53 PM Advice Needed on Customers Structuring
n2compliance Offline
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n2compliance
Joined: May 2011
Posts: 102
I need some advice - I have several commercial customers who every month seem to structure transactions in order to avoid having a CTR filed. I file SARs on all of them every 90 days. I also mail each of them a copy of the FinCEN Notice that explains what structuring is and possible penalties that could result. But still every month they continue with this practice. Other than this, they are "good customers", they've just figured out the system and for whatever reason don't want a CTR filed. I'm sure management would not want to close their accounts. So am I covered by just continuing to file SARs every 3 months and continuing to mail the FinCEN notices? Am I just responsible for reporting what I see, and let FinCEN deal with them if they choose to?

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#1766497 - 12/12/12 02:57 PM Re: Advice Needed on Customers Structuring n2compliance
edAudit Offline
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edAudit
Joined: Jul 2008
Posts: 4,796
You are here
figure out the costs involved with your departments investigation of these customers and figure out as best as you can the profitablity of the customers when management can be shown that these "good customers" cost them money each month the accounts should be closed. Be sure to include the latest articles about HSBC and Standard Chartered ... with your recomendation to close.
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#1766498 - 12/12/12 02:58 PM Re: Advice Needed on Customers Structuring n2compliance
rlcarey Online
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rlcarey
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Galveston, TX
"good customers" has no meaning IMHO. Are they profitable considering all the extra work involved? That is the only yardstick, unless the customer presents a risk of loss to the bank. There is no regulatory requirement to close the accounts.
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#1766506 - 12/12/12 03:05 PM Re: Advice Needed on Customers Structuring n2compliance
n2compliance Offline
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n2compliance
Joined: May 2011
Posts: 102
Thank you!

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#1766769 - 12/12/12 07:00 PM Re: Advice Needed on Customers Structuring n2compliance
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
There's also no requirement that you repeatedly send them the FinCEN handout. Once is sufficient, IMHO.
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#1766832 - 12/12/12 08:08 PM Re: Advice Needed on Customers Structuring n2compliance
Princess Romeo Offline

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Princess Romeo
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Posts: 8,272
Where the heart is
I for one would like to update that FinCEN brochure and start by changing to the title of it to say:

YOU AIN'T FOOLING ANYONE SO KNOCK IT OFF ALREADY!
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#1766957 - 12/12/12 10:37 PM Re: Advice Needed on Customers Structuring n2compliance
WonderWoman Offline
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WonderWoman
Joined: Mar 2007
Posts: 2,108
gone fishin'
Also, from the exam manual:

SAR Filing on Continuing Activity
......Ultimately, the decision to maintain or close an account should be made by a bank in accordance with its own standards and guidelines.

The bank should develop policies, procedures, and processes indicating when to escalate issues or problems identified as the result of repeat SAR filings on accounts. The procedures should include:

•Review by senior management and legal staff (e.g., BSA compliance officer or SAR committee).
•Criteria for when analysis of the overall customer relationship is necessary.
•Criteria for whether and, if so, when to close the account.
•Criteria for when to notify law enforcement, if appropriate.
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#1767447 - 12/14/12 02:17 PM Re: Advice Needed on Customers Structuring n2compliance
BrendaC Offline
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BrendaC
Joined: Sep 2001
Posts: 6,029
Sweet Home AL
The advice provided by WonderWoman is very prudent. Consistency is extremely important in managing repeat offenders. You can paint yourself into a corner if you treat one customer one way and another customer totally different in a similar situation. Design a process and stick with it.
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#1779177 - 01/23/13 08:09 PM Re: Advice Needed on Customers Structuring n2compliance
kjbabington Offline
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Joined: Jan 2006
Posts: 203
FL
So in situations when you want to close an account due to unusual activity, what do you tell the customer as a reason.

I know the bank is not required to provide one but when the customer is sitting in the branch demanding an explanation what are some examples of reasons we could provide?

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#1779240 - 01/23/13 09:42 PM Re: Advice Needed on Customers Structuring n2compliance
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,229
Galveston, TX
Because our contract with you gives us the right to close your account at any time for any reason and we have chosen to exercise that right.

If they don't like that answer then tough cookies. You are not required to provide them an answer any more than they have the right to demand one.
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#1779246 - 01/23/13 09:48 PM Re: Advice Needed on Customers Structuring n2compliance
Waterfall Offline
Member
Joined: Oct 2006
Posts: 96
PA
Your opening account disclosures probably allow you to close an account for any reason. If so, just reference the disclosure when closing the account. If they are sitting there and keep bugging you for an answer, I have used this in the past: "Your account does not fit our bank's risk profile." That has worked for me and I don't give anything else.

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#1779251 - 01/23/13 09:50 PM Re: Advice Needed on Customers Structuring n2compliance
Indy Banker Offline
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Joined: Aug 2010
Posts: 528
Our bank has drawn a line between "suspicious" activity and "illegal" activity as to making the decision to close an account. In other words, unless we have proof beyond doubt that a customer's activity is in fact illegal, we will report the suspicious activity, monitor the account regularly, but allow the account to remain open if - like previous posters suggest - the account is otherwise profitable enough to warrant the extra time involved in babysitting it. If we have verifiable proof of illegal activity, such as a customer admitting to the teller he structured his transaction to evade CTR filing by the bank, e.g., then we report and immediately close the account. Admittedly it is a thin line, but we are bankers not cops, and I have shared this strategy with every Federal and state examiner that has conducted our BSA exams over the years and nobody has ever had an issue with it.

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#1779375 - 01/24/13 02:34 PM Re: Advice Needed on Customers Structuring n2compliance
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
Banks should have an in-house policy and procedure for determining when to close an account involved in SAR filings, as bike4life has suggested. A key element in such a policy ought to be an assessment of the cost/benefit of keeping the account open. Let's also admit that, at today's fractional rates of return on deposits, it's awfully hard to justify keeping an account open if it costs more than $10 a month just to provide the added attention that EDD will require.
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