1. Bank Secrecy Act
SCEFCU
June 21, 2005

2. What is the Bank Secrecy Act?
The Bank Secrecy Act is a combination of various statues that require credit unions to record, retain and report certain financial transactions to the Federal Government and was enacted to help in the investigation of money laundering, tax evasion, terrorist financing, and various other criminal activities.

3. What the Bank Secrecy Act is NOT!
It is not in place to protect the privacy of our members. (That is the Right to Financial Privacy Act.)

4. What are SCEFCU’s responsibilities under BSA?
Establish, implement, and diligently monitor the BSA policy
Report and maintain records for certain currency transactions and other transactions such as the sale of negotiable instruments and wire transfers
Report suspicious activity
Verify identity of members and maintain records of the method of verification
Screen members for OFAC compliance
Provide training for employees and volunteers

5. Who is our BSA Officer? Primary Back-Up
Jennifer Curran – Internal Auditor
Back-Up
Lilia Rojo – Director of Operations

6. Currency Transaction Report (CTR)
A CTR must be filed for all cash transactions in excess of $10,000 by the 15th calendar day after the day of the transaction.
We must verify and record the identity of the individual presenting the transaction as well as the information about the person or business for whom the transaction is being conducted.
This includes multiple transactions on the same business day.

7. Monetary Instruments Log (MIL)
The credit union will obtain and maintain information on sales of monetary instruments, sold for cash, in amounts from $3,000 to $10,000.
This includes multiple sales of monetary instruments in one day to the same member.

8. Suspicious Activity Report (SAR)
For any suspicious activity, immediately notify your supervisor or the BSA Officer.
The Credit Union is required to send a completed SAR to FinCEN whenever the Credit Union detects any known or suspected Federal criminal violation.
SARS ARE CONFIDENTIAL!!
DO NOT notify a member that we are filing a SAR.

9. Types of Suspicious Activities
Structuring transactions to avoid a CTR
Money Laundering
Counterfeit checks
Bribery
Counterfeit Credit/Debit Cards
Misuse of Position
Check fraud
Counterfeit instrument
Computer intrusion

10. Types of Suspicious Activities
Terrorist financing
Mortgage loan fraud
Check kiting
Credit Card fraud
Mysterious disappearance
Commercial loan fraud
Wire Transfer fraud
Consumer loan fraud
Embezzlement

11. When to File a SAR
A SAR will be filed within 30 days of the initial detection for:
Suspicious transactions aggregating as follows:
$5,000 is suspect is known
$25,000 if no suspect is identified
No dollar limit for transactions involving insiders… this means YOU!
The BSA Officer will file the SAR.

12. Characteristics of Money Laundering
Exchanges of currency
Structured withdrawals or deposits of currency over several days within the same week or transactions at different branches

13. Characteristics of Money Laundering
Frequent or uncharacteristic purchases or cashing of monetary instruments for cash
Frequent or uncharacteristic wire transfers

14. Characteristics of Money Laundering
Transactions that exceed the member’s normal cash deposit or withdrawal activity by 50% or more
Any suspected Money Laundering must be reported to the BSA Officer for further investigation and SAR filing.

15. International Transportation of Currency or Monetary Instruments Report
This report is filed whenever a person physically transports, mails, or ships more than $10,000 in currency or monetary instruments into or out of the U.S.

16. Office of Foreign Assets Control (OFAC)
What is OFAC?
An agency of the Treasury Department that imposes economic sanctions against hostile countries, entities, and individuals.
We cannot do transactions for anyone who falls under OFAC restrictions.

17. OFAC Requirements
To abide by the regulations and requirements administered by OFAC, the Credit Union must do the following:
Maintain current OFAC lists
Properly complete and file OFAC forms
Verify new account holders and existing member activity against OFAC lists
Periodically verify existing account holders against OFAC lists
Train staff regarding their responsibilities under OFAC

18. How Do We Comply With OFAC?
For new members, we verify their information with ChexSystems upon opening the new account. The Credit Union will be notified if there is a match.
We perform periodic screenings of our existing member database through a program designed to detect matches to the current OFAC lists

19. How Do We Comply With OFAC?
Wire transfers, VIGO transfers, and ACH transactions are also checked against the OFAC lists.
If any search indicates a match, a freeze must be placed on the account or transaction and the BSA Officer must be contacted immediately.

20. Member Identification Policy (MIP)
SCEFCU’s Member Identification Policy is part of the USA PATRIOT Act, which aims to protect the U.S. financial system from money laundering and terrorist financing.
The credit union will not establish a formal relationship with a potential member until we have formed a reasonable belief that we know the individual’s true identity.

21. MIP Requirements
SCEFCU’s Member Identification Policy meets the USA PATRIOT Act standards which, at a minimum, include the following requirements that must be obtained from each new member:
Name,
Date of birth
Physical (street) address
Identification number *

22. MIP Requirements
For U.S. persons a taxpayer identification number; for non-U.S. persons, a TIN, passport number and country, alien identification card number, or number and country of issuance of any other government-issued document with a photograph.

23. SCEFCU Additional Requirements
SCEFCU also requires additional sources of identification, which may include any non-expired government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard.
For U.S. persons: State-issued driver’s license or I.D. card, or U.S. passport
For non-U.S. persons: Passport, alien I.D. card, Matricula Consular or other non-expired government-issued identification.

24. SCEFCU Additional Requirements
SCEFCU may also use additional non-documentary resources to support the verification of a member’s identity, such as:
Credit reports
Other consumer reporting agencies
Public databases

25. MIP Requirements In addition, we must:
Record a description of all documentation we relied on to verify the member’s identity, and retain it for 5 years after the account is closed;
Screen potential members against government-issued lists of known or suspected terrorists;
Provide a notice to members of our Member Identification Policy that they can view before opening an account.

26. Record Retention
All records related to maintaining BSA compliance will be retained for a period of no less than five years by the Credit Union.

27. Violations of the BSA
Compliance to all Bank Secrecy Act requirements is a condition of employment at SCE FCU.
No employee, manager, officer, or volunteer of the Credit Union has authority to waive any BSA requirement.
There are strict penalties that may be enforced by the Department of the Treasury upon any violation of the BSA.

28. Violations of the BSA
In addition, all employees, managers, officers, and volunteers of SCEFCU can be held personally liable and assessed penalties for the participation in the violation.
Ignorance of the law is not an acceptable excuse to avoid potential personal liability and willful acts of non-compliance are prosecuted as felonies!

29. Questions?