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Frequently Asked Questions (FAQ)

The process of taking funds from illegal or illicit activities and making the funds appear legitimate.  The process typically entails three stages: Placement, Layering, and Integration.

Author Name:Chesapeake Consulting

In 1999, the Bank Secrecy Act was revised to designate certain Non-Bank Financial Institutions (NBFI) as ‘money services businesses’.  Check Cashers, Foreign Currency Exchangers, and issuers or sellers of money orders that conduct transactions for any of these services in excess of $1,000 for any one person in one business day is a MSB and must register as such with FinCEN.  Anyone that provides money transmission services, regardless of the amount, is a MSB.  Money Service Businesses must comply with the requirements that the Bank Secrecy Act mandates for MSBs. There are many nuances to the definition of a MSB and the information above is only a partial definition.

Author Name:Chesapeake Consulting

A report that is required by the Bank Secrecy Act to be filed for cash-in or cash-out currency transactions that exceed $10,000 for any one person in one business day.  Financial Institutions, and other businesses, must file the CTR to the Financial Crimes Enforcement Network (FinCEN) within 15 days of the transaction.

Author Name:Chesapeake Consulting

The Bank Secrecy Act’s minimum requirements are known as the ‘four pillars’:

  • Written policies and procedures to mitigate financial crimes
  • Designation of a Compliance Officer
  • Ongoing training to your employees
  • Periodic independent review of your compliance program

There are other federal regulatory obligations and you may have state regulations to which you have to abide.  In addition, your bank may impose their own requirements.

Author Name:Chesapeake Consulting

No.  Your compliance manual must be customized to your business operation, address all the financial products and services you offer and cover all of your compliance obligations.  A money transmitter or other vendor is only providing generalized policies and procedures specific to their product/service.

Author Name:Chesapeake Consulting

Absolutely YES!  A Compliance Officer must have the necessary training, knowledge and experience, as well as the resources and time, to be able to implement and manage your compliance program.  An ignorant and ineffective Compliance Officer will result in a deficient compliance program.  A deficient compliance program can cause problems with your regulators and perhaps cause you to lose your banking relationship.

Author Name:Chesapeake Consulting

Regulations only specify that training must be ‘periodic’ but the de facto standard is at least yearly.  Training should be specific to the job function of the employee and should be documented as to the materials used, the date provided, and the names of the employees trained.  Testing to confirm that the employees understand the material should also be provided.

Author Name:Chesapeake Consulting

The review allows an independent party to assess both the adequacy of the policies and procedures used to mitigate financial crimes and the efficiency of the implementation of the policies and procedures.  The results of the review can provide an alert to deficiencies so they can be fixed.  In addition to its internal use, the review may be used by regulators and banks to give them insight into the quality of your compliance program.

Author Name:Chesapeake Consulting

The review can be conducted by anyone other than the Compliance Officer or anyone subordinate to the Compliance Officer.  However, the person conducting the review needs to have sufficient knowledge of the compliance obligations.  BSA regulation does not specify a frequency for a review.  The regulation requires the scope and frequency of the review to be conducted commensurate with risk.  However, for most MSBs, at least every twelve months is the expectation.  The review must have transactions and systems testing to document the findings.

Author Name:Chesapeake Consulting

By choosing Chesapeake Compliance Consultants, you will serviced by a Certified Anti-Money Laundering Specialist (CAMS) who understands both the regulatory obligations of your business and has experience in operating a Money Service Business.  Some businesses try to use internal staff but this can lead to questions of whether the review was sufficiently independent.  Also, the qualifications of the person conducting the review may be less than optimal and the review produced lacking.  Accountants or lawyers are sometimes used but unless they have additional training and expertise regarding the regulatory obligations of a MSB, they may not know how to conduct a proper review and the product they produce may be less than industry standards.  These professionals may also be more expensive to use.  A review that is not properly prepared may result in issues with your regulators or bank.

 

Using Chesapeake Compliance Consultants is a cost effective way of ensuring that your review will be thorough, meet all regulatory and industry standards, and provide you with the information you need to maintain a satisfactory compliance program.

Author Name:Chesapeake Consulting