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#2244768 - 10/28/20 06:15 PM Agent of MSB and PATM Due Diligence
Brandi S. Offline
Member
Joined: Jun 2020
Posts: 54
Our bank has a new business customer which we changed our policy and procedure for (right before I became the BSA Officer) and I just performed their first quarterly high risk assessment and noticed a few issues. We are a small community bank that did not accept customers that are MSB's previously, we amended our P&P to allow AMSB's that don't sell money orders over $1,000. This customer also has a private ATM. During my review I noticed this customer wasn't withdrawing cash to stock their ATM. According to our PATM worksheet the loan officer filled out the customer was going to do cash withdrawals from their business to restock the ATM. I am not comfortable with this, what do you all do if you have a customer like this? Would you bank them? What due diligence do you perform? We do file CTR's regularly for this business. Also, when we acquired this account the previous BSA Officer was convinced we didn't need to keep tabs on the AMSB portion of their business because it's a minimal risk. Is there something I can do to also keep tabs on their MSB Activity, besides recording their ACH merchant withdrawals to Western Union, to make sure nothing becomes questionable? We do have their current registration on file.

Thank you in advance, I'm trying to get comfortable with this account and I am not there yet. I appreciate any help given.

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#2244771 - 10/28/20 06:24 PM Re: Agent of MSB and PATM Due Diligence Brandi S.
BrianC Offline
Power Poster
BrianC
Joined: Nov 2004
Posts: 6,685
Illinois
Pretty simple. Cash placed from the til into the ATM is cash that you do not see deposited so you need to have a way to identify the ACH settlement from the ATM and include that in your EDD analysis when trying to determine if the volume of cash the business generates is reasonable. This can be a challenging and time consuming process if the transactions are comingled in an operating account.

The bank is well within its rights to require that the customer open a separate ATM account the receives ACH settlement and then require that the machine be filled with cash withdrawals from the account. The reduces the risk of a customer filling the ATM with "alternative" sources of cash that could be derived from illegal activity.

If you are banking an MSB that cashes checks put "promises" not to cash checks over $1,000 you also inherent the fun task of periodically monitoring deposited checks to make sure that they are adhering to that. For me, I'd rather have them registered with FinCEN as a check casher and review their BSA Program. Otherwise I'm running the risk of having to file a SAR for an unregistered MSB if they routinely "forget" the $1,000 limit.

Filing CTRs regularly does not mean that there isn't suspicious activity. Don't fall into that trap. Some of the best fraud is done out in the open because the fraudsters figure no one will question since "Who would commit fraud in broad daylight?" and then we let our guard down which is what they are counting on.

Due diligence should include comparing anticipated to actual activity, comparing volume of activity from one period to the next and to similar periods from the previous year looking for unexplained changes in behavior. It may require reviewing financials to see if the volume of activity is similar to reported annual sales. Ultimately you have to keep collecting information like pieces to a puzzle until you understand what the picture is supposed to be.
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#2244780 - 10/28/20 09:29 PM Re: Agent of MSB and PATM Due Diligence BrianC
Brandi S. Offline
Member
Joined: Jun 2020
Posts: 54
Thank you so much for taking the time to help me with this. I just started a spread sheet tracking their ATM settlements and cash deposits. I will compare these numbers to their account opening and loan documents. I have a another spreadsheet where I've been recording when I research their deposits to monitor their cashed checks.

Thank you again!!

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#2244932 - 11/02/20 03:34 PM Re: Agent of MSB and PATM Due Diligence Brandi S.
Local_Banker Offline
Member
Joined: Jun 2019
Posts: 76
If the customer indicated on the PATM worksheet that they would be withdrawing cash to fund the ATM, I would hold them to it. Let them know you are serious or you risk them stepping over the line in other areas too. Since you are performing the first review now is the time to act.

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