Credit unions vary significantly in size and the types of services offered. Therefore, the nature of the credit union’s books and records vary.

Smaller institutions, whose services are limited to share deposit and share loan accounts may not conduct any currency transactions. These institutions often have very simple handwritten transaction records and manual bookkeeping systems.

Larger institutions may have several branches and offer extensive financial services. These institutions usually have on line data processing systems, detailed currency control policies, and sophisticated internal control procedures.

In addition to the required records listed in 4.26.9.4.2.2, records commonly found at credit unions include:

Additional records may include:

An example of a BSA examination audit trail is shown in Exhibit 4.26.9-17.

An interview should be conducted at the credit union’s main location, with a credit union officer, BSA compliance officer and/or other key personnel who have knowledge of the credit union’s operations, policies and internal control procedures. Determine who is responsible for compliance with the BSA recordkeeping and reporting requirements.

Document the credit union’s background history, the number of branches operated and affiliated organizations.

Identify the BSA compliance officer and all other personnel who are responsible for conducting, recording and reporting of BSA transactions and evaluate their understanding of the BSA recordkeeping and reporting requirements. It is important to determine the extent of the interviewee's knowledge of the BSA requirements should any violations be noted during the examination. These individuals should be identified by name, title and specific responsibilities.

Tellers handling currency transactions should be interviewed. The examiner should ascertain:

Responsible officers and supervisory personnel, who approve large currency transactions and/or are responsible for filing CTRs, should be interviewed. These individuals may include the BSA compliance officer, manager and/or head teller. The examiner should ascertain:

Each interview should be documented in the case file.

Interview the AML compliance officer, as well as compliance program employees. Determine level of familiarity with internal compliance programs and internal controls.

Ask specific questions to determine the financial services offered by the credit union. The examiner must consider all financial services or products offered by the credit union such as money remittance, check cashing, and sales of money orders and/or traveler’s checks.

Ask open-ended questions throughout the interview. Do not ask questions that require only a yes or no answer.

For examples of possible initial interview questions, See Exhibit 4.26.9-19. This is only a guide that should be expanded or contracted as each BSA examination warrants.

Any records the credit union maintains that are relevant to the BSA examination can be requested and reviewed. The examiner will determine if the credit union is maintaining adequate records and must document any recordkeeping violations.

Ask to see the credit union’s policy and procedures manual regarding the BSA identification, recordkeeping, reporting and exemption requirements. The examiner should determine if the institution’s BSA information is correct and its procedures are adequate.

Review in house training programs and inspect retained training records. The examiner should inspect records of external training such as certificates of course completion. Most individual state credit union leagues and trade associations offer BSA training courses for all levels of personnel, and provide documentation of attendance.

Identify dates during which large currency transactions occurred. The examiner should review currency received from or shipped to the correspondent bank using:

Review relevant audit reports or reviews that address BSA policies, procedures or operations for BSA-relevant issues.

Inspect the tellers’ cash control proofs and supporting cash in/out documents to identify specific large currency transactions. Based on the information obtained from the preplan, interviews, and review of written records, select a sample of transactions consisting of amounts ranging from a minimum of $3,000 to greater than $10,000.

Trace the sampled transactions through the internal control system to CTR filings for amounts greater than $10,000. If there is a transaction over $10,000 and no CTR was filed, check to see if the customer has been designated as an exempt person before determining if an apparent reporting violation has occurred.

Review the credit union’s retained copies of CTRs for accuracy and completeness.

Compare the credit union’s retained copies of CTRs to the CBRS record to insure they have been filed.

Review Forms 90-22.1 (FBAR) if the credit union maintains foreign bank accounts or has signature authority or financial interests in foreign countries.

Review FinCEN Form 105(CMIR) if the credit union is involved with the transportation of currency into or out of the U.S.

Review the credit union’s records maintained for the sale of bank checks or drafts, cashier’s checks, money orders, and/or traveler’s checks for amounts involving currency in amounts of $3,000 to $10,000, inclusive. Ensure all required information has been obtained pursuant to the recordkeeping requirements of 31 CFR 103.29.

Review the credit union’s records to determine if all the required information on money transmittals (such as wire transfers) of $3,000 or more has been obtained and retained pursuant to the recordkeeping requirements of 31 CFR 103.33.

Evaluate the credit union’s recordkeeping procedures relating to customer account activities and certificates of deposits pursuant to the recordkeeping requirements of 31 CFR 103.34.

Review the SAR file to determine if there are recurring patterns of activity by the same or related members of the credit union. If patterns are noted, question the appropriate personnel as to the actions taken with regard to the transactions. A detailed analysis of suspicious transactions may be warranted to determine if the individuals are utilizing the credit union for structuring activities. Contact the BSA Workload Selection coordinator to determine whether a referral is warranted or whether to expand the review of the SAR file.

If weak internal controls were noted or lack of management oversight was determined, the examiner should consider expanding the scope of the BSA examination. The examiner should also consider expanding the scope to other branches/offices, if applicable.

If potential reporting and recordkeeping violations are noted, the examiner should discuss the violations with the BSA group manager prior to expanding the scope. Depending on the frequency and nature of the violations, the examiner may not need to expand the scope, i.e. minor recordkeeping violations. The manager will decide whether or not to refer the violation to the Financial Crimes Enforcement Network for possible enforcement action.

Other considerations for expanding a BSA examination include prior violations, management cooperation and the filing history recorded on CBRS.

When expanding the BSA examination, the examiner should consider performing the following:

If the credit union has one teller who conducts all large currency transactions, the examiner should focus on the transactions conducted by that teller.

Trace transactions for the purchase of money orders, traveler’s checks, bank drafts, and cashier’s checks involving currency in amounts of $3,000 to $10,000, inclusive, to the records required by 31 CFR 103.29.

Trace all transactions for currency deposited or withdrawn in excess of $10,000 to the retained copies of CTRs or to the exempt customer list.

If questionable transactions are identified as being conducted by a customer designated as an exempt person, the examiner may want to review the suitability of the exemption.

The examiner should be alert to transactions or patterns that may indicate potential structuring activities. If structuring is suspected, the examiner should:

If potential violations are being conducted through the purchase of traveler’s checks, money orders, bank drafts, and cashier’s checks, the examiner should review the specific control register used for the negotiable instrument sales to determine the extent of the potential violations.

When apparent violations have been detected, the examiner should interview management and any other personnel involved. All discussions should be documented in the case file.

Follow procedures in IRM 4.26.6 to timely conclude the BSA examination.

Consider preparing Form(s) 5346, Examination Information Report, when information is obtained during the BSA examination that indicates a possible income tax violation warranting referral. (Refer to IRM 4.26.6.)

The examiner must obtain adequate supporting documentation for each type of the following violations:

.

The credit union's knowledge of BSA requirements must be determined before determining whether violations should be formally referred to FinCEN.

Some factors indicating the financial institution’s knowledge of the BSA reporting and recordkeeping requirements and its compliance intentions are:

In situations where knowledge or intent cannot be established within the scope of selected records, the examiner should expand the period to include recent transactions that occurred after knowledge can be clearly documented. For example, the examiner selected records from January, February, and March. The inspection of these records discloses currency transactions that appear to be structured and which should have been reported. The credit union denied knowledge of the structuring regulations during the initial interview. In April, the examiner informed the credit union about the suspicious transactions and of the structuring regulations. The examiner later expanded the examination period to include May and June transactions. The examiner found violations in May and June. The credit union’s knowledge was documented during the notification of the structuring violations and took no action to prevent the recurrence of violations. The credit union’s intent to not comply should be documented.

Because willfulness is a state of mind, generally only circumstantial evidence of willfulness will be available. A willful violation is the intentional violation of a known legal duty.

Since BSA penalties are assessed by the FinCEN, which does not have any field examiners, the examiner must thoroughly document all facts on the issue of the intent. After the examiner secures the necessary information and documents the apparent violations, the examiner should follow the procedures as detailed in IRM 4.26.8.

After documenting the potential violations, the examiner should provide a list of the violations to the credit union and solicit a written explanation for each of the violations identified. The list should include:

The examiner should advise the credit union of any recordkeeping deficiencies as well as any deficiencies in their policies, procedures, internal controls, and compliance programs that might result in noncompliance with the BSA.

Any additional documents or information, provided by the credit union in response, should be reviewed and a determination should be made as to whether any items should be removed from the list of violations.

When the credit union contends that a CTR was filed, and provides its retained copy as evidence, the examiner should query the CBRS database and conduct an exhaustive search before concluding that a CTR was not received. In conducting the search, the examiner should query all customer numerical identification on the CTR such as account number (if applicable), SSN, and identification credential number.

The financial institution and/or the customer can be involved in potential money laundering schemes. The examiner must focus on both the financial institution and the transactor(s) during the BSA examination.

Money laundering techniques which could be used by the financial institution include:

Money laundering trends which could be used by the customer or transactor include:

For money laundering trends pertaining to check cashing refer to IRM 4.26.9.3.

For money laundering trends pertaining to money orders refer to IRM 4.26.9.6.

For money laundering trends pertaining to traveler’s checks refer to IRM 4.26.9.8.

For money laundering trends pertaining to fund transmittals refer to IRM 4.26.9.7.

When evidence of a money laundering scheme is uncovered, a referral should be made on Form 5104. (Refer to IRM 4.26.8 for referral procedure.)

A currency dealer or exchanger (other than a person who does not exchange currency in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions) is defined as a money services business. (31 CFR 103.11(uu)(1))

A currency dealer’s or exchanger’s records usually include:

An example of a BSA examination audit trail is shown in Exhibit 4.26.9-20.

The initial interview of a currency dealer or exchanger should include questions to ascertain:

The examiner must consider additional services or products offered by a currency dealer or exchanger such as money transmitting, check cashing, and sales of money orders.

A copy of the written BSA compliance procedures should be requested and included in the case file. An explanation of the BSA training of employees should also be documented.

Interview all individuals conducting currency transactions and those responsible for compliance with the BSA recordkeeping and reporting requirements.

Each interview should be documented in the case file.

Ask the owners or management if they have knowledge of any structuring transactions having occurred or if any suspicious transactions have occurred. This question also must be asked while interviewing employees who have customer contact.

Interview former employees if appropriate.

The examiner should ask to be shown how all "window" and "back room" transactions are conducted and recorded.

Ask open-ended questions throughout the interview. Do not ask questions that require only a "yes" or "no" answer.

An example of possible initial interview questions for currency dealers or exchangers is shown in Exhibit 4.26.9-22. It is only a guide that should be expanded or contracted as each BSA examination warrants.

Conduct the BSA examination at the currency dealer’s or exchanger’s place of business.

Some currency dealers or exchangers, especially Casas de Cambio, maintain inadequate or no records.

A currency dealer's or exchanger's records may often include the following:

Records may include foreign bank account records and the records of domestic and foreign agents or nominees.

Review the bank account records for all the domestic and foreign bank accounts over which the currency dealer or exchanger has authority. Many currency dealers or exchangers have foreign bank accounts or use foreign bank accounts held in agent or nominee names to facilitate conducting their financial services. The examiner should probe and ask for foreign bank account records.

Determine if the records include all financial services provided by the currency dealer or exchanger that have been identified during interviews and from visual observation of the business operations. Pursue any records that have not been provided.

Select records from a current period to evaluate. The period with the highest money flow should be considered.

Select dates within the period and reconcile the transaction vouchers, daily transaction log, client ledger, and the monthly and annual summary sheets.

Analyze the summary and transaction records for cash in and cash out for transactions conducted by the currency dealer or exchanger. All large or unusual items should be pursued.

Trace daily transactions through the daily transaction log. Reconcile the transaction log’s beginning and ending cash balances to prior and subsequent logs. Also, trace the transaction log cash balances to the cash (vault) inventory balances and then to the balance sheets and books. Any unexplained variations should be investigated. If cash balances are not entered on the transaction log, the examiner should ask how the currency dealer or exchanger reconciles the cash on hand.

Trace transactions to the transaction vouchers, checking for compliance with 31 CFR 103.37(b)(3) requirements, and trace all transactions over $10,000 to CTRs.

Review the currency dealer’s or exchanger’s copies of CTRs, SAR-MSBs, CMIRs (if applicable) and FBARs (if applicable) for accuracy and completeness. The CBRS should also be checked to verify that the reports were actually filed.

Review relevant audit reports or reviews that address BSA policies, procedures, or operations for BSA relevant issues.

Review fund transmittal documents. Records for the transmission of funds abroad should include copies of receipts issued to customers and records evidencing interbank transfers (i.e., wire confirmations or drafts.)

Review the currency dealer’s or exchanger’s written BSA procedures (policy letter) from its AML compliance program and obtain a copy for the case file.

Consider using a database to input information from the transaction records, for purposes of detecting structuring and other money laundering schemes.

Analyze database sorts of the name, address and phone number fields to detect possible structured transactions, unreported transactions, errors and/or deficiencies in the financial institution’s BSA compliance system.

If structured transactions or BSA violations are detected, the examiner should interview the responsible person or employee who conducted the transaction. Based on the responses, the examiner should consider expanding the scope of the examination. (Refer to IRM 4.26.6.) All facts should be discussed with the BSA Group Manager.

Obtain copies of all source documents that show any apparent BSA violations.

Issue a Letter 1112 or referral on Form 5104 for all failures to file FinCEN Form 104, FinCEN Form 105,and Form TD F 90-22.1 and any recordkeeping violations. Prepare the referral in accordance with the examination referral guidelines. (Refer to IRM 4.26.8. )

Follow the procedures in IRM 4.26.6 to timely conclude the BSA examination.

Consider preparing a Form 5346, Examination Information Report when:

Review filed registrations (if applicable) for accuracy and completeness.

Verify applicability of requirement to register.

Review agent list (if applicable) for all required elements.

Forward agent list to BSA Workload Selection coordinator separate from your case file.

Review agent contracts and terms for acceptance and termination as an agent.

Review all agents rejected or terminated as an agent and forward list to BSA Workload Selection coordinator separate from your case file.

The examiner must obtain adequate supporting documentation for each type of the following violations:

The money services business' knowledge of BSA requirements must be determined before determining whether violations should be formally referred to FinCEN.

Other factors indicating the money services business’ knowledge of the BSA registration, reporting, recordkeeping, and compliance program requirements and its compliance intentions are:

In situations where knowledge or intent cannot be established within the scope of selected records, the examiner should expand the period to include recent transactions that occurred after knowledge can be clearly documented. For example, the examiner selected records from January, February, and March. The inspection of these records discloses currency transactions that appear to be structured and which should have been reported. The money services business denied knowledge of the structuring regulations during the initial interview. In April, the examiner informed the money services business about the suspicious transactions and of the structuring regulations. The examiner later expanded the examination period to include May and June transactions. The examiner found violations in May and June. The money services business’ knowledge was documented during the notification of the structuring violations and took no action to prevent the recurrence of violations. The money services business’ intent to not comply should be documented.

Because willfulness is a state of mind, generally only circumstantial evidence of willfulness will be available. A willful violation is the intentional violation of a known legal duty.

Since BSA penalties are assessed by the FinCEN, which does not have any field examiners, the examiner must thoroughly document all facts on the issue of intent. After the examiner secures the necessary information and documents the apparent violations, the examiner should follow the procedures detailed in IRM 4.26.8.

After documenting the potential violations, the examiner should provide a list of the violations to the money services business and solicit a written explanation for each of the violations identified. The list should include:

The examiner should advise the money services business of any recordkeeping deficiencies as well as any deficiencies in their policies, procedures, internal controls, and compliance programs that might result in noncompliance with the BSA.

Any additional documents or information, provided by the money services business in response, should be reviewed and a determination should be made as to whether any items should be removed from the list of violations.

When the money services business contends that a CTR was filed, and provides its retained copy as evidence, the examiner should query the CBRS database and conduct an exhaustive search before concluding that a CTR was not received. In conducting the search, the examiner should query all customer numerical identification on the CTR such as account number (if applicable), SSN, and identification credential number.

Money launderers may use the bank accounts and the investment and financial contacts of a currency dealer or exchanger on both sides of an international border to break the paper trail between their currency and themselves. This permits them to transport, convert or invest currency in the legitimate international financial system. A currency dealer or exchanger involved in money laundering may assist in converting the currency into non-monetary assets, and/or physically transporting currency, and/or making wire transfers, and/or otherwise disguising the ownership of funds.

Common methods used by currency dealers or exchangers involved in laundering money include:

Some examples of tactics used by currency dealers or exchangers involved in money laundering are:

The examiner may find instances where international funds transfers occurred without the money crossing the international border. This is accomplished by offsetting different client transactions through book entry systems shared with the currency dealer’s or exchanger’s foreign office, or with other currency dealers or exchangers, agents, or nominees located on either side of the border. This process is similar to the check clearing operation of the banking industry.

When evidence of a money laundering scheme is uncovered, a referral should be made on Form 5104. (Refer to IRM 4.26.8 for referral procedures.)

Financial institutions that sell money orders for national companies are agents. The agent’s relationship to the issuer of the money orders is governed by a trust agreement.

The agent is allowed to advertise that it sells the national company’s money orders and is authorized to fill in the dollar amount on behalf of the national companies.

Money orders are drawn on the national company’s bank account and the transaction is not complete until the national company receives the face amount from the agent and the money order clears the bank.

The dollar value of money orders sold by an agent can be limited by the bonding company’s trust agreement or by the agent’s policy, but in theory they can be in any denomination.

The national company issues and the agent maintains sales records, of money orders using a sequential numbering system.

An agent’s summary sales report is sent daily to the national company and the correspondent bank sends a clearing report. Using these reports, the national company keeps a record of all money orders sold and cashed. Agents are sent a discrepancy statement for money orders cashed but not reported as sold.

Money received from the sale of money orders is usually deposited, by the agent, into a separate bank account. Payment is made to the national company by check, wire transfer, electronic mail or draft.

National money order companies either collect their fee up front when the money orders are given to the agents or have their agents remit the fee together with the face amount of the money orders sold.

Agents may receive commission statements or reconciliations of money orders sold. The agent’s commission can be accounted for this way.

Identification of persons purchasing money orders in amounts under $3,000 is often left to the individual agents, and in many instances, little or no identification is requested from the purchaser.

National companies keep a copy of the front and back of all cashed and canceled money orders.

An issuer of money orders (other than a person who does not issue such money orders in an amount greater than $1,000 in currency or monetary or other instruments to any person on any day in one or more transactions) is defined as a money services business (31 CFR 103.11(uu)(3)).

A seller or redeemer of money orders (other than a person who does not sell or redeem such money orders in an amount greater than $1,000 in currency or monetary or other instruments to any person on any day in one or more transactions) is defined as a money services business (31 CFR 103.11(uu)(4)).

Money order agent records usually include:

An example of a BSA examination audit trail is shown in Exhibit 4.26.9-23.

Interview the officers, owners and employees to determine their knowledge of the BSA and the financial institution’s procedures to comply with the reporting and recordkeeping requirements. The duties and responsibilities of the officers and employees should be documented along with a description of the financial institution’s records and an explanation of the flow of transactions through the records. Knowledge is one of the elements needed to prove willfulness with respect to apparent violations of the regulations.

Ask specific questions relating to the business, area, and services offered. The examiner must consider all services offered by the business, such as money transmitting, check cashing, and sales of money orders. For example, a customer could attempt to launder $15,000 by sending a wire transfer for $8,000 and purchasing $7,000 in money orders.

Ask the owners or management of the financial institution if they have knowledge of any structured transactions having occurred, or if any suspicious transactions have occurred. This question should be asked again while interviewing employees who have customer contact.

Interview all individuals who handle currency transactions. Question their knowledge and training of the BSA recordkeeping and reporting requirements.

Ask open-ended questions throughout the interview. Do not ask questions that require only a yes or no answer.

An example of initial interview questions for issuers, sellers, or redeemers of money orders is shown in Exhibit 4.26.9-25. It is only a guide and should be expanded or contracted as each BSA examination warrants.

Any records the financial institution maintains that are relevant to the BSA examination can be requested and reviewed. The examiner will determine if the financial institution is maintaining adequate records and must document any recordkeeping violations.

Review the written policy statements, procedures, etc. of the financial institution as they relate to the BSA.

Analyze the records of the financial institution for all types of financial services offered. Each type of financial service should be examined separately.

Determine the money order register completeness by reconciling this to the summary sales reports sent to the issuing company, the discrepancy report from the issuing company, and the bank deposits.

Trace large block sales or large dollar single transaction sales of money orders in the money order register or money order close out reports to the records required for recordkeeping, SAR reporting and CTR reporting. Block sales are a group of sequentially numbered money orders sold concurrently for the maximum denomination, or right below the maximum dollar amount. The maximum amount allowed for each money order is usually set at $300, $500 or $1,000 by the issuing company. The review should identify:

Inspect any copies of money orders retained by the financial institution.

Request that the financial institution obtain copies of money orders from the money order issuer for any questionable or suspicious transactions. It may be necessary to issue a Title 31 summons to obtain this information. Refer to IRM 4.26.8 before issuing any Title 31 summons.

Review the financial institution’s records to determine if all the required information on the purchaser of money order involving currency in amounts of $3,000 to $10,000, inclusive, has been maintained and verified pursuant to the recordkeeping requirements of 31 CFR 103.29.

It is recommended that a computer database be used when the compliance examination is part of a multiple location local project or there are a large number of block sales or large dollar sales. All single or block transactions, exceeding a dollar amount cutoff should be entered in the database from source documents to see if the transactions are related.

Analyze database sorts of the name field and the address field to detect possible structured transactions, unreported transactions, errors, and deficiencies in the financial institution’s BSA compliance system.

The databases, if applicable, of BSA examinations of nearby financial institutions in geographical targeting projects should be consolidated and sorted to detect related structuring activity occurring at more than one location.

Review copies of CTRs filed by the financial institution to ensure they are accurate and complete. Ensure filed CTRs have been retained by the financial institution for the required five-year period. Use the CBRS database to verify that the CTRs were timely filed and contain the same information as the copies maintained by the financial institution.

Query the CBRS database for transactions conducted by owners, managers, and employees of the financial institution to detect possible unreported transactions of the financial institution that were instead reported under the individual’s name.

If structured transactions or other BSA violations are detected, the examiner should interview the responsible person or employee who conducted the transaction. Based on the answers given, the examiner should consider expanding the scope of the examination. (Refer to IRM 4.26.6.) All facts should be discussed with the BSA Group Manager.

Review relevant audit reports or reviews that address BSA policies, procedures, or operations for BSA issues.

Issue a Letter 1112 or prepare a referral on Form 5104for all failures to file FinCEN Form 104 and any recordkeeping violations. Prepare in accordance with the examination guidelines. (Refer to IRM 4.26.8.)

Follow procedures in IRM 4.26.6 to timely conclude the BSA examination.

Prepare Form(s) 5346, Examination Information Report, when information is obtained during the BSA examination that indicates a possible income tax violation warranting referral. (Refer to IRM 4.26.6.)

Review copies of filed MSB registrations and renewals (if applicable) for accuracy and completeness.

Determine whether the business was required to register as an MSB.

Review agent list (if applicable) for all required elements.

Forward agent list to BSA Workload Selection coordinator in a separate shipment from the case file.

Review agent contracts and terms for acceptance and termination as an agent.

Review all agents rejected or terminated as an agent and forward list to BSA Workload Selection coordinator in a separate shipment from the case file.

The examiner must obtain documentation for each type of the following violations:

The knowledge of the MSB must be established before determining whether violations should be formally referred to FinCEN.

Other factors that may indicate the MSB had knowledge of the BSA registration, reporting, recordkeeping, and compliance program requirements, and its compliance intentions are:

In situations where knowledge cannot be established within the scope of selected records, the examiner should expand the period to include recent transactions that occurred after knowledge and intent can be clearly documented. For example, the examiner selected records from January, February, and March. The inspection of these records discloses currency transactions that appear to be structured and which should have been reported. The MSB denied knowledge of the structuring regulations during the initial interview. In April, the examiner informed the MSB about the suspicious transactions and of the structuring regulations. The examiner later expanded the examination period to include May and June transactions. The examiner found violations in May and June. The MSB’s knowledge was documented during the notification of the structuring violations and took no action to prevent the recurrence of violations. The MSB’s intent to not comply should be documented.

) Because willfulness is a state of mind, generally only circumstantial evidence of willfulness will be available. A willful violation is the intentional violation of a known legal duty.

Since BSA penalties are assessed by FinCEN, which does not have any field examiners, the examiner must thoroughly document all facts on the issue of intent. After the examiner secures the necessary information and documents the apparent violations, the examiner should follow the procedures detailed in IRM 4.26.8.

After documenting the potential violations, the examiner should provide a list of the violations to the MSB and solicit a written explanation for each of the violations identified. The list should include:

The examiner should advise the money services business of any recordkeeping deficiencies as well as any deficiencies in their policies, procedures, internal controls, and compliance programs that might result in noncompliance with the BSA.

Any additional documents or information provided by the money services business in response should be reviewed and a determination should be made as to whether any items should be removed from the list of violations.

When the money services business contends that a CTR was filed, and provides its retained copy as evidence, the examiner should query the CBRS database and conduct an exhaustive search to ensure that a CTR was not received. In conducting the search, the examiner should query all customer numerical identification on the CTR such as account number (if applicable), SSN, and identification credential number.

The financial institution and/or the customer can be involved in potential money laundering schemes. The examiner must focus on both the financial institution and the transactor(s) during the BSA compliance examination.

Money laundering techniques which could be used by the financial institution include:

Money laundering techniques which could be used by the customer/transactor include:

When evidence of a money laundering scheme is uncovered, a referral should be made on Form 5104. (Refer to IRM 4.26.8 for referral procedures.)

A money transmitter is defined as an MSB under 31 CFR 103.11(uu)(5).

In addition to the required information listed in 4.26.9.7.1.3, a money transmitter’s records usually include

An example of a BSA examination audit trail is shown in Exhibit 4.26.9-26.

Ask specific questions relating to the business, area, and services offered. The examiner must consider all financial services or products offered by the business, such as money remittance, check cashing, and sales of money orders. For example, a customer could attempt to launder $15,000 by sending a wire transfer for $8,000 and purchasing $7,000 in money orders.

Identify the BSA compliance officer and all other personnel who are responsible for conducting, recording, and reporting of BSA transactions and evaluate their understanding of the BSA recordkeeping and reporting requirements. It is important to establish knowledge of the BSA should any violations be noted during the examination. These individuals should be identified by name, title, and specific responsibilities.

Ask the owners or management of the financial institution if they have knowledge of structuring transactions having occurred, or if any suspicious transactions have occurred. This question also must be asked while interviewing employees who have customer contact.

Interview all individuals who handle currency transactions (i.e., prepare currency reports, maintain records, etc.). Determine their knowledge and amount of training received on the BSA recordkeeping and reporting requirements.

Ask open-ended questions throughout the interview. Do not ask questions that require only a yes or no answer.

Each interview should be documented in the case file.

Interview the AML compliance officer, as well as compliance program employees. Determine the level of familiarity with internal compliance programs and internal controls.

For examples of possible initial interview questions for a money transmitter, see Exhibit 4.26.9-28. This is only a guide that should be expanded or contracted as each BSA examination warrants.