1. E XAMINATION AND E NFORCEMENT I SSUES : B EYOND T HE P ILLARS The AMLA Third Annual Full Day BSA/AML Conference October 4, 2013 Presented by: John M. Geiringer john.geiringer@bfkn.com Chicago, Illinois (312) 984-3217

2. 2 Risk Assessment Size Complexity Geographic footprint Customer base Products / services

3. 3 Elements Internal controls to ensure ongoing compliance Independent testing Individual responsible for coordinating / monitoring compliance Appropriate training for employees and directors Customer Identification Program

4. 4 Internal Controls Policies, procedures and processes designed to limit and control risks and achieve compliance

5. 5 Internal Controls - Recommendations Policies and Procedures Clearly written, comprehensive, and current Organized and tailored Useful to train others Document evidence of adherence

6. 6 Internal Controls – Recommendations (cont.) Monitoring and Reporting System Identification or alert of unusual activity SAR decision-making, completion and filing Escalation criteria to close account and notify law enforcement Analysis of relationship when repeat SARs filed

7. 7 Independent Testing Conducted either by internal audit department or qualified third party Performed by individuals independent of compliance program Conducted at least annually

8. 8 Independent Testing - Recommendations Proper involvement of BSA Officer Level of scope Appropriate transaction testing Assessment and validation of automated monitoring system Results provided directly to Board

9. 9 BSA Officer Board designates individual Comprehensive knowledge of BSA and related regulations Implements Board policies and directives Coordinates and monitors day-to-day compliance Ensures that employees adhere to policies, procedures and processes

10. 10 BSA Officer - Recommendations Appropriate expertise, time, and resources Periodically meet with employees across bank Succession planning

11. 11 Training Employees and directors receive appropriate training relevant to responsibilities Comprehensive, ongoing and documented Incorporates developments and changes

12. 12 Training - Recommendations Include board of directors Updated requirements Compliance trends and hot topics Changes to compliance program Include policies and procedures Documented and noted in minutes

13. 13 Customer Identification Program Assess customer BSA risk at account opening Develop understanding of normal and expected customer activity Policy on account opening refusal and closing accounts Monitor high risk accounts and compare anticipated to actual activity Risk-based EDD procedures (cash businesses, service providers, PEPs, etc.)

14. 14 Q UESTIONS ?

15. E XAMINATION AND E NFORCEMENT I SSUES : B EYOND T HE P ILLARS The AMLA Third Annual Full Day BSA/AML Conference October 4, 2013 Presented by: John M. Geiringer john.geiringer@bfkn.com Chicago, Illinois (312) 984-3217