Regarding the new OCC BSA/Money Laundering exam procedures and Handbook . . . I'm curious how anyone thinks they will tackle the project of identifying high-risk accounts to monitor for suspicious activity. On the loan side we use NAICS codes; so I created a list of about 100 business codes that profile these entities. So I can now ID specific businesses from our loan system. But for the deposit customer only, how do you think you will identify exisiting and ongoing new accounts?

I have a department that does nothing but monitor high risk accounts. We require site surveys on all new business accounts that are opened and a form that is completed by the officer completing the site survey.

We have created a Know Your Customer Log in the new accounts areas that lists all business accounts opened, whether they are new or existing and whether a site survey needs to be completed. The KYC Log and site surveys are submitted monthly to this department to make sure that follow-through is being completed.

The department gets copies of all large charge back items.

They review the Kiting suspect list daily, looking for even dollar deposits made frequently.

We have created a Watch List where all of this information is compiled and then it is reviewed by the BSA Committee that meets weekly. The Committee rates the accounts based on the information available.

The department also monitors uncollected funds daily.

This is in addition to the staff we have that monitors CTR's for quality assurance.

It is a department running on overwhelm some days. All I can say is good luck. It has taken more resources than we thought orginially.

Joelene,
Can you give us an idea of the size of your institution?

260 Million

It sure seems like you are devoting a lot of time to BSA. So much for the efficiency ratios!

How many SARs do you file in a month? Just curious.

Dolly Nugent
VP/Compliance Officer

Ken & Others:

When you look at defining "high risk" accounts, you can enhance your ability to reduce losses if you first concentrate on those accounts with multiple risks. For example, some types of accounts are prone to BSA violations, loan fraud, bankruptcy fraud and check kiting -- including:
1. Restaurants;
2. Bars;
3. "General contractors"; and
4. Home-based, sole proprietorship service companies that don't sell "things".

Other types of account relationships are favored by organized crime as money-laundering and embezzlement vehicles, including:
1. Restaurants;
2. Bars;
3. Small, sole proprietorship manufacturing companies (e.g., t-shirt printing, novelties and crafts);
4. Liquor stores in "seedy", downtown areas; and
5. Factoring businesses.

------------------
Dana Turner
Security Education Systems
danaturner@bankersonline.com
830-535-6500

It varies, but on average at least four. Some months we may only file one or two, and then there are months that we may file five or six. It really depends on when we have knowledge of something that may be suspious.

We spend a lot of time training the branch operations managers on what they might/should consider suspicious. They notify the BSA QC officer who does the investigation. She brings the findings to the Committee, who decides whether a SAR should be filed.

Can anyone be more specific about how you initially identified existing high risk accounts? System reports, parameters, etc?

A good place to start is look at your uncollected funds reports. Anyone using a lot of uncollected funds could be considered high risk if a large item were returned and they didn't have the funds to cover. Also watch your charge back items. If you see a trend you may have to do some more investagating to see if they should be considered high risk. I feel sure the examiners will be pointing out everything they consider high risk, if you want to wait until they arrive.