Presentation on theme: "Presentation on BSA/AML/Fact Act Systems For the Anti-Money Laundering Association Orlando, Florida September 17, 2008 Presented by Wayne Barnett President."— Presentation transcript:
Presentation on BSA/AML/Fact Act Systems For the Anti-Money Laundering Association Orlando, Florida September 17, 2008 Presented by Wayne Barnett President and Chief Systems Architect Wayne Barnett Software A Texas Corporation
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Cash Transaction Monitor: First year cost: $6,250 for banks & credit unions with up to $60MM in assets, $12,500 for banks & credit unions with more than $60MM in assets. Annual renewal cost: $1,250 for small institutions. $2,500 for large ones.
Suspicious Activity Monitor: First year cost: $6,250 for banks & credit unions with up to $60MM in assets, $9,000 for banks & credit unions with more than $60MM in assets. Annual renewal cost: $1,250 for small institutions. $1,800 for large ones.
Wire Transaction Monitor: First year cost: $6,250 for banks & credit unions with up to $60MM in assets, $7,500 for banks & credit unions with more than $60MM in assets. Annual renewal cost: $1,250 for small institutions. $1,500 for large ones.
Cash Transaction Monitor I.Most banks and credit unions have three issues when it comes to monitoring cash transactions and reporting suspicious activity: i.They don’t aggregate small amounts. For example, $1,000 in cash deposited daily aggregates to $22,000 a month or $250,000 a year. ii.They don’t aggregate related party accounts. For example, if a husband, wife and wife’s mother each deposit $4,000 in cash on a day—and if the wife is a signor on all three accounts, a CTR must be filed. iii.They don’t track large transit-items cashed by their customers.
Cash Transaction Monitor II.When it comes to risk-rating your customers, there are three common examination findings: i.Risk ratings are not assigned quantitatively. ii.Risk ratings criteria are not consistently used. iii.Risk ratings are not revised when transaction activity changes
Cash Transaction Monitor III.Banks that don’t use a system to automatically generate CTRs and electronically file them, on average, waste hours a week for every $100 million in assets. A bank with $300 million in assets is wasting 240 man-hours per year, at a cost of approximately $10,000, if they haven’t automated their CTR filings.
Cash Transaction Monitor IV.Banks that file more than 20 CTRs a week are being strongly encouraged by the Regulators to exempt more accounts. Most banks and credit unions are hesitant to file exemptions, because of the two annual requirements for exempted accounts. i.Verify the customer had eight or more days where CTRs were required. ii.Review the customer’s transactions for suspicious activity.
Suspicious Activity Monitor V.An estimated 90% of all banks and credit unions have not yet implemented policies or procedures for complying with the Fair and Accurate Credit Transactions (FACT) Act. i.You must have a FACTA policy, even if you intend to implement few or no additional procedures. ii.You can assert that, based on past history, your risk of loss from identity theft is minimal, and implement no additional procedures. iii.However, you must check for unauthorized address changes prior to issuing new or replacement ATM, debit or credit cards.
Suspicious Activity Monitor VI.Identity theft is a growing problem and banks that aren’t looking for it will incur big losses. We recommend you consider the following when searching for fraudulent transactions. i.Accounts with unusual transaction activity base on the number of transactions. ii.Accounts with unusual transaction activity base on the dollar amount of transactions. iii.Accounts with unusual transaction activity base on the number of transactions and the dollar amount. iv.Accounts with infrequent transaction activity. v.Accounts with ACH transactions that seldom or never have ACH transactions.
Suspicious Activity Monitor VI.Identity theft is a growing problem and banks that aren’t looking for it will incur big losses. We recommend you consider the following when searching for fraudulent transactions (continued). vi.Accounts with International ACH transactions that seldom or never have International ACH transactions. vii.Accounts with unusual cash withdrawals. viii.Accounts with unusual wire transfers. ix.Accounts with recent address changes. x.Accounts with multiple address changes in the past few months.
Suspicious Activity Monitor VII.There are some unexpected benefits with FACTA. i.Enhanced ability to see Advanced Fee checks. ii.Better ability to spot laundering with ACH transactions. iii.Better ability to spot failing loans. iv.Better ability to spot theft and embezzlement.
Wire Transaction Monitor VIII.Wire Transfer recordkeeping is a time consuming and expensive task. i.The Travel Rule became effective in 1995, which requires financial institutions to retain detailed information on wire transfers of $3,000 or more. Originator’s name and address Amount of the wire Settlement date of the wire Beneficiary ‘s name and address Name and address of the receiving institutions (including intermediary banks) Instructions issued by the originator. ii.Most institutions do not retain the Travel Rule information in electronic format. Institutions are required to provide this information to the Regulators, in electronic format.
Wire Transaction Monitor iii.For the last two years, FinCEN and the Federal Reserve have been asking for a change in law that would lower the amount of wire transfer recordkeeping from $3,000 to $1,000. iv.The Financial Action Task Force (FATF) has recommend that all countries in the G-7, plus Russia, lower their wire transfer recordkeeping requirement to $1,000 v.The Regulators generally recommend that banks acquire automated wire transfer recordkeeping software when their total monthly recordable wire transfers number 100 or more per month. vi.It takes hours a month to record and review 100 wire transfers. The estimated cost to maintain and review the Wire Log is $3,000-$5,000 a year.