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#2140358 - 08/01/17 04:53 PM New Account Questions
Victoria S Offline
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Joined: Jul 2015
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Management is hesitant to add " anticipated level of activity- deposits in cash, etc" to the CDD questions due to its intrusive nature; instead relying on actual activity reports. Is there a regulation or ruling that indicates this is a requirement for new accounts question tree or just a recommendation?

Thanks.

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#2140360 - 08/01/17 05:02 PM Re: New Account Questions Victoria S
LetsTalkCompliance Offline
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I thought it was part of the new CDD/EDD Rule - understanding the nature and purpose of our business customers, and their expected level of activity.

We've trained our frontline staff to ask our business customers for four things at account opening:
Projected Cash Activity (deposits)
Projected Wire Activity (# of wires)
Type of wires - Domestic or International
Private ATM on-site? (Y/N)

How will Management react when they have to start collecting CIP on beneficial owners?

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#2140372 - 08/01/17 05:32 PM Re: New Account Questions Victoria S
ocbeach Offline
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Maryland
We've been collecting expected levels of cash activity on consumer and commercial accounts for several years. This is not new to CDD.

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#2140374 - 08/01/17 05:42 PM Re: New Account Questions Victoria S
bcompliance Offline
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Look at page 61 of the pdf document in the FFIEC BSA Exam Manual and that will give them an idea of what you should be looking for: https://www.ffiec.gov/bsa_aml_infobase/documents/bsa_aml_man_2014.pdf
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#2140426 - 08/02/17 01:04 PM Re: New Account Questions Victoria S
Victoria S Offline
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Management is not exactly happy about the new cdd rule for beneficial owners, but understand it is a mandatory compliance.

Their question is: where is it mandatory to state the anticipated level of activity for a new account?

I know it is a recommendation, but from what I see in the exam manual it is actual or anticipated activity, which gives you a choice. Anyone else agree?

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#2140429 - 08/02/17 01:17 PM Re: New Account Questions ocbeach
ahkcompliance Offline
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Originally Posted By ocbeach
We've been collecting expected levels of cash activity on consumer and commercial accounts for several years. This is not new to CDD.


We have been collecting it for awhile now. If you don't ask then how do you determine what is supposed to be normal or unusual activity?

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#2140434 - 08/02/17 01:44 PM Re: New Account Questions Victoria S
bcompliance Offline
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Management is not exactly happy about the new cdd rule for beneficial owners, but understand it is a mandatory compliance.

I don't blame them. It is worthless at this point. I don't think it is required anywhere to get anticipated levels of activity. You just need gain enough information from your customers to develop a risk profile. One way to do that is ask what they anticipate their activity to be. At a prior bank we didn't ask anticipated activity. We just asked what products/services they were going to use and rated off of that.
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#2140441 - 08/02/17 02:19 PM Re: New Account Questions ahkcompliance
edAudit Offline
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Originally Posted By ahkcompliance
Originally Posted By ocbeach
We've been collecting expected levels of cash activity on consumer and commercial accounts for several years. This is not new to CDD.


We have been collecting it for awhile now. If you don't ask then how do you determine what is supposed to be normal or unusual activity?


pertty much what we have been doing in the past number of banks and I for one see no purpose of it (bad guy is going to lie plain and simple) except for the regulators to be able to check off that box. So we do it
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#2140442 - 08/02/17 02:30 PM Re: New Account Questions Victoria S
thomasj Offline
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Pennsylvania
Examiners will almost always push you to gather anticipated activity, even if it provides no value or serves very little purpose. In many of the institutions that I have talked to, they gather this anticipated activity because they were told they have to do so, then file it away with the signature card to never be seen again. While it may not be required it will certainly be strongly recommended as a best practice by a lot of examiners. I see very little practical purpose to gathering anticipated activity unless you are actively utilizing it in risk rating and/or monitoring your customers behavior going forward.
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#2140449 - 08/02/17 03:21 PM Re: New Account Questions Victoria S
ACBbank Offline
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As others have indicated there is minimal to no value to doing this for regulator retail customers. However, we are being forced into this practice as well. In my neck of the woods this is being pushed onto multiple banks and the few that have fought back have paid for it.
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#2140460 - 08/02/17 03:41 PM Re: New Account Questions Victoria S
thomasj Offline
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Pennsylvania
In a former life, we were pressured into adding the anticipated volume questions to our customer onboarding platform which was a custom configuration. Once entered, the anticipated volume disappeared into a restricted area of our core that no one in the BSA department could access. The fact that we were gathering the information was enough for the examiner to check a box so they were fine with it. Being able to view and utilize anticipated volumes in regard to AML monitoring and EDD is actually somewhat useful if you can get the data into the systems that you utilize to monitor those areas. The primary pitfall of asking these questions is that often the front line staff will not actually ask the question or the person actually opening the account will have no idea so they will guess.
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#2140498 - 08/02/17 05:24 PM Re: New Account Questions Victoria S
bcompliance Offline
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The primary pitfall of asking these questions is that often the front line staff will not actually ask the question or the person actually opening the account will have no idea so they will guess.

I had an auditor telling me how useful the expected activity was in monitoring activity. They wanted me to use the expected vs. actual activites to set up alerts. I asked "so if you walked in here and we asked you how much cash you were going to deposit or withdrawal in a month, how many wire transfers, the volume of ACH, and the volume of monetary instruments you'd purchase, you'd be able to give me useful information that I could rely on?" He answered that he'd be guessing because he had no idea. The conversation ended there.
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#2140502 - 08/02/17 05:52 PM Re: New Account Questions Victoria S
edAudit Offline
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Or Mr. Corner Candy Store (and illegal gambling den) expects to deposit 1million in cash each month. So no alert when the target is reached?
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#2140504 - 08/02/17 06:04 PM Re: New Account Questions Victoria S
ACBbank Offline
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New York City
Deviations in terms of expected vs. actual activity can be useful, but cannot act as substitute for a suspicious activity monitoring program. We use expected vs. actual as part of the high risk review process, along with update site visits and BDO certification regarding changes for high risk clients.

Expected vs. actual goes off the rails when you apply to regular retail clients, which unfortunately is a growing trend or when it's worked in as part of suspicious activity monitoring.

FWIW, if you're going to use expected vs. actual you really should implement a percentage deviation to ensure that you're buried with useful hits.
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#2140509 - 08/02/17 06:18 PM Re: New Account Questions Victoria S
bcompliance Offline
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It was a discussion over retail customers... I agree it could be useful for high risk customers. Retail customers are not high risk in my eyes.
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#2140608 - 08/03/17 02:31 PM Re: New Account Questions bcompliance
Elwood P. Dowd Offline
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Appendix K in the examination manual supports your position. For a U.S. person's account, all that is necessary is a basic profile with generic threshold monitoring. That's because its unlikely (not impossible, unlikely) that a consumer account will be used to launder money. If it is, the reasonable assumption is that the activity will stand out pretty clearly.

However, as cautioned above, field examiners may choose to ignore the "on a risk basis" words of limitation in the new regulation. They may insist supervised institutions ask everyone the same questions regardless of their individual capabilities for laundering money.

If your management comprehends a risk based approach and decides not to ask ridiculous questions under ridiculous circumstances, then don't. However you need to test their resolve. During the examination process some retreat faster than the French army ever could.
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#2141455 - 08/09/17 09:44 PM Re: New Account Questions ACBbank
Just Jean Offline
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USA
I have found value in knowing the expected monthly activity when I find something that appears suspicious. I can say, "It says here that they expect 5% of deposits to be in cash. They've had 3 CTRs this month each of which exceeds the total expected for all deposits for the month." The whirring sound is their officer back pedaling on what a great guy the customer is.

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#2141476 - 08/10/17 11:34 AM Re: New Account Questions Victoria S
edAudit Offline
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Just wondering what is suspicious if they filed 3 CTR's?

Did the Branch employees ask about the source of the cash?

Who wrote "says here that they expect 5% of deposits to be in cash" and was that a vaild asessment or some branch employee wrtiing a guess?
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#2141647 - 08/11/17 09:32 AM Re: New Account Questions Just Jean
Elwood P. Dowd Offline
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If it's a consumer customer and she says any percentage of her deposits are going to be in cash, there's going to be a supplementary discussion at the time the account is opened, long before a CTR appears on the horizon.,
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#2141661 - 08/11/17 12:55 PM Re: New Account Questions Victoria S
John Burnett Offline
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Cape Cod
Agreed. There are a few consumers who are more likely to make legitimate cash deposits -- those who earn tips at work, entrepreneurial teens (think lawn mowing or snow shoveling and the occasional lemonade stand), and the rare beneficiary of a bridal or baby shower who gets one of those fun, tacky, money trees. But most consumers I know who come into extra cash tend to spend it rather than bank it.
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#2141703 - 08/11/17 03:40 PM Re: New Account Questions Victoria S
Just Jean Offline
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USA
Clients don't always know we're filing a CTR. If they say their estimated cash is $5k/month and all of a sudden they deposit over $20k twice, I'm thinking that cash needs to be justified other than, "they're good customers, really nice."

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