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Beneficial Ownership: Two Months Out

By Meagan Norlund posted 07-24-2018 11:44

  

NEACH is thrilled to welcome Compliance Month guest blogger, Nancy E. Lake, CAMS-Audit, CAMS-FCI, Director of Compliance Anchor. If you would like more information on Beneficial Ownership after reading this blog post, consider listening to the replay on-demand Beneficial Ownership, The Newest BSA Challenge that Nancy recorded for NEACH members earlier this year. 

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Beneficial Ownership has been on your mind as a BSA Officer for well over a year and you have created processes, worked with systems, trained your staff, and taken many other steps to comply with the rule’s requirements. Now we are a few months past implementation, but not everything is a simple as FinCEN seems to make it. There are still unanswered questions and uncertainties, such as will FinCEN keep the roll-over relief or re-implement the original rule after August 9th? However, you are challenged with preparing for your audits and exams to ensure smooth sailing. What are some steps you should take to prepare yourself and your institution? Beneficial Ownership has been on your mind as a BSA Officer for well over a year and you have created processes, worked with systems, trained your staff, and taken many other steps to comply with the rule’s requirements. Now we are a few months past implementation, but not everything is a simple as FinCEN seems to make it. There are still unanswered questions and uncertainties, such as will FinCEN keep the roll-over relief or re-implement the original rule after August 9th? However, you are challenged with preparing for your audits and exams to ensure smooth sailing. What are some steps you should take to prepare yourself and your institution?

Step 1: Update Your Policies

BSA/AML Policy

  • General Beneficial Owner (BO) requirements
  • CIP for BOs (can be similar to CIP for all customers but doesn’t have to be)
  • Risk-based procedures for verifying the identity of each beneficial owner of a legal entity customer
  • Circumstances in which the bank should not open an account
  • The terms under which a customer may use an account while the bank attempts to verify the identity of the beneficial owner(s) of a legal entity customer
  • When the bank should close an account, after attempts to verify the identity of the beneficial owner(s) of a legal entity customer have failed
  • When the bank should file a SAR in accordance with applicable law and regulation Per FinCEN’s “Beneficial Ownership Requirements for Legal Entity Customers – Overview” – https://www.ffiec.gov/press/pdf/Beneficial%20Ownership%20Requirements%20for%20Legal%20Entity%20CustomersOverview-FINAL.pdf 
  • OFAC Policy – Remember OFAC is required for BOs

Step 2: Update Your Procedures – Mirror the policies above and explain how each area of your institution is accomplishing those requirements including:

  • Deposits
  • Loans
  • Updating of BO information on a risk basis (trigger events)
  • Steps when customers refuse to provide information

Step 3: Develop a Quality Control (QC) Process – What are you doing to ensure your policies and procedures are being followed? 

  • What are your QC processes?
  • Who is responsible for QC?
  • What is the remedial action for issues?


Step 4: Continue Your Training – When questions or issues arise, others in your institution are bound to experience the same scenario, use these questions and issues to enhance your training with relevant scenarios.


Step 5: Document Everything
– Remember the famous rule, “If you don’t document it, it didn’t happen.”

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About Nancy E. Lake, CAMS-Audit, CAMS-FCI
Director of Compliance Anchor
https://www.acbb.com/compliance 

Nancy Lake has over 14 years of experience in the BSA/AML world. Nancy was CAMS certified in 2008, received her CAMS-Audit certification in 2013, and her CAMS-FCI certification in 2015. She has served as BSA Officer in multiple community banks where she successfully created and implemented the entire BSA program including one bank with a number of international MSBs. She has conducted bank wide BSA/AML training including Board of Director training. Nancy has experience working with and implementing several automated BSA/AML monitoring systems.

Along with conducting monthly online training, Nancy speaks at numerous conferences throughout the year here in the U.S. and even overseas. For four years, she has been an instructor at the PA Bankers School of Banking. Nancy joined Atlantic Community Bankers Bank in 2012 to develop a new consulting division, Compliance Anchor. She is utilizing her BSA experience and 19 years as an educator to provide assistance to community banks in the areas of training, risk management, and the development of sound internal programs and best practices.

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