To establish a baseline for new customers opening accounts, we plan on asking for average dollar deposits/withds over a month, etc. If you are doing so already, how are you responding to customers asking "why do you need this info?...why are you asking for this info?... If you are not asking these questions but plan to shortly, how are you training your CSRs to respond to these questions - which are inevitable. Thanks!

Depends on what you are going to use your baseline for. Are you just trying to help the customer choose the right account option for their needs?

The baseline is to satisfy regulatory requirements. We need to obtain this info, i.e. average deposits of cash totalling $2500. per month, to use to identify variances. We never asked such intrusive questions before, we are not a big multi-national with a lot of bells & whistles. So, the questions will be off putting for many.

What regulatory requirements are you referring to?

BSA requirements (actually "best practices"). Our agency indicated that we cannot be catching all the SARable trans. without establishing profiles and them investigating all the variances from the profiles. Interesting you should ask...as part of all your BSA risk assessment, etc. you should be doing this as well. How else are you establishing the profiles to track the variances???

Trees,

You can save yourself a lot of time and heartache if you purchase BSA/AML monitoring software. A mojority of the software applications will analyze the consumers data and determine a "baseline" and then flag any and all transaction that are not normal based on the activity as compared to the "baseline".

We have such software and it definitely saves a lot of time. Additionally, if the consumer is going to launder money through the account, they know to estimate high.

Tree - we only ask it of our business customers at this time. If they questions it, we tell them we just need to get an idea of what kind of transactions will be occuring on the account. We toyed with the idea of asking the questions of personal customer but thought we would hold out on that for now.

We started doing this earlier this year, as the BSA examiners insisted on it even though it is not a regulatory requirement. It is not going to be taken care of by AML software - they want to see a form filled out at account opening that they can look at.

We ask for the information in ranges, rather than asking customers to guess at their average balances, etc. After tremendous anxiety on the part of management and the Board of our community bank at having to ask these "invasive" questions, it was a complete nonevent. The branch staff admitted those who had worked in larger banks have been asking these questions for several years. The customers did not complain at all. Of course, they sometimes do a pretty poor job of filling out the form, but that's another issue.

I recently opened an account at a large national bank. The New Accounts rep had all kinds of questions including:
1. What is the purpose for opening this account?
2. What will you use the account for?
3. What do you do for a living?
4. What is your annual salary?
5. What average balance to you expect to keep in the account?
6. What services will you use - checks, ATM, bill pay, wires
7. Where do you have other accounts?
8. Why did you chose to open an account here? (Easy - you sent me a $50 bonus coupon!)

This was from one of the "biggies" in the industry. So the next time your officers and marketing people complain about the "questions", tell them that's what the big guys do. (Afterall, isn't that what those folks are always telling you?)

Quote:

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4. What is your annual salary?

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For a consumer opening a checking account, that one may be a little over the top. (Yes, I understand why the bank would want to know, but I can understand just as well why the consumer would say, "None of your business" or just make up a lower figure.) I would.

A direction that a bank must establish account profiles for individuals is not a routine regulatory suggestion. It's unfortunate that some individual examiners are pushing the technique rather than a more general suggestion that the bank should be able to identify unusual activity in consumer accounts.

First, most banks don't have the ability to monitor individual accounts; i.e. the "profile" would not serve as the basis for comparison unless triggered by an event. Even if there was a triggering event, the most recent activity in the account, not a profile developed at account opening (how long ago?) would be a better baseline. Second, while any type of illegal activity can be conducted through consumer accounts, it's not likely. Banks would be better off focusing their AML time and dollars where the risks are, larger accounts with more sophisticated activity.

We only ask for balance estimates etc for business accounts as well on the business application. We have reports we use to examine an individuals account and look at the history of the account to flag any variances.

Wow, I', glad I wait a few days for responses. They are quite varied. We have software (in implementation stage) which will build profiles based on history but our agency was insistent that we get info up front. I agree with the couple of banks that are going to focus on businesses. That will be our approach as well. It will be quite a mess as most of the dollar amounts will probably be off base for many. Also, new businesses have no idea on what they will really see in activity - no matter, that was an agency "must do". I like the idea about ranges rather than dollar amounts but our software prompts for dollar amounts. I was glad that some of you were not getting to much flak from the customers. So many managers are afraid that this will cause a furur in our market but I believe, if handled well, it should not cause a big stir. I am going to work with branch staff to be ready for the "why do you need this" type of questions, though. As we work through this aspect of the regulatory wish list I'll keep you posted.

We started by asking for dollar amounts, but have switched to the ranges. It makes the customer less hesitant and makes the process easier for our new account staff as well.

Trees,
Please consider going back to your EIC and ask if he or she really intended you to establish profiles for all accounts including consumers' . If the answer is, “Yes,” I think Complianceman's observation should be considered as interpretive; I think your examiners just told you to buy the software without using those words.

While I believe profiling consumer accounts to be a poor use of resources, I've thought about it for a couple days and don't think a paper based system will even work, let alone be a good use of your time.

Complianceman,
How long have you been using your AML software and, in general terms, how much interesting activity has it detected in consumer accounts?

BOLers,
Does anyone else have any comments about AML software unearthing suspicious activity in consumer accounts?

Same experience as Trees here. We had AML software for a year before the last exam that built a profile on every customer.

OCC (not just one examiner, this went up the line to Deputy Comptroller for region) insists that bank must have a profile completed on every new customer, including consumers, and you cannot wait for software to develop the profile. We tried to put questions in a "salesy" format and tell customer we were establishing a profile to make sure we provided the right accounts for them, set them up for wires if they needed them etc. If they still pushed, we reverted to explaining that the secondary reason was to satisfy regulatory requirements.

I also will tell you that even though the software reviewed every transaction and told you if the customer veered from their norm, and even though cash in and out and wires in and out were reviewed by the software and by people in a manual review, that was not good enough. I was able to fight them back on a few things that really got into fantasy land but otherwise the expectation is quite onerous.

The OCC is really insistent on profiling of all new customers. I had only before seen this in high end Private Banking.

I am making a few adjustments to our commercial account applications and I would like to get some ideas about the ranges (for antipated account activity questions) people are using. We have never asked questions related to the account activity in regards to deposits, wire's, withdrawals, etc but feel this is a good idea. Would anyone be willing to share a copy of their account application they use for commercial accounts? Any help would be greatly appreciated!

I have been using the AML software since November 1, 2005 with system data as of October 31, 2005. By have at least a 120 days activity profile for each and every customer, the software application actually identifies any and all questionable transactions as "suspects". Then we go into the system, review the transaction to determine if the activity is truely questionable. If we agree with the system, we will conduct additional research and if applicable, file a SAR.

Since using the software application, our SAR filign activity has increase at least 35-40%. Additionally, we have used the information anaylzed by the software application to contact customers and verify certain transactions. In one case specifically, a customers daughter had stolen her checks and was forging the mothers signature. When we contacted the customer, she refused to press charges. But in the case of the FI, we required the customer to close her account and open a newe one so as to prevent the FI of being knowledgable of the fraud and continuing to let it happen.

It is a great piece of equipment and helps us hold the retail personnel accountable for their actions, I.e., not placing sufficient holds on certain negotiable instruments. It's definitely worth the expense (or technically savings).