THE NEW CTR - IBAT · 11/30/2012 1 bsa/aml: the new ctr & sar shannon phillips deputy general counsel independent bankers association of texas san antonio area bankers

11/30/2012

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BSA/AML: THE NEW CTR & SAR SHANNON PHILLIPSDEPUTY GENERAL COUNSEL

INDEPENDENT BANKERS ASSOCIATION OF TEXASSAN ANTONIO AREA BANKERS COMPLIANCE ASSOCIATIONANNUAL FINANCIAL INSTITUTIONS REGULATORY UPDATE DECEMBER 4, 2012

THE NEW CTR

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FinCEN mandates use of BSA E-Filing System

Institutions are

required to file

most BSA reports

electronically starting

July 1, 2012

BSA E-Filing

BSA E-Filing

These forms must now be submitted electronically:

CTR

DEOP

SAR

FBAR

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Benefits of BSA E-Filing

� Ability to obtain electronic notification of transmissions, receipt of submission, and errors, warnings, and alerts to improve filing quality

� Batch validation – quality check for your filing

� Electronic CTR and SAR acknowledgements

� Filer feedback reports – a helpful analytical report

� Use of Adobe Forms Templates to reduce data entry

� Ability to print paper copies can minimize change to existing internal review and approval processes

Benefits of E-Filing

� Ability for your institution’s Supervisory User to assign system roles

� Training materials available from FinCEN

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Three Ways to E-File

� Discrete BSA Filing (single report)� A solution for smaller institutions or those that

only file small numbers of BSA reports

� Batch BSA Filing� A solution for medium-size or larger institutions or

those that consistently file larger numbers of BSA reports

� System-to-System Filing (Secure Data Transfer Mode)� A batch filing solution for the largest filers

New FinCEN reports

� The new FinCEN reports have been required since April 1, 2013

� The new reports are available through the BSA E-Filing System

� They may not be

submitted in paper

� They may be filed

through discrete or

batch filing

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CTR

� The form is uniform for multiple industries

� New fields to

provide law

enforcement

additional

information

and support

Features of the new CTR

The FinCEN CTR tabs

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Any type of financial institution can use the new CTR and the new SAR (The below box is from the new CTR. This box in the new SAR is at Item 82.)

Tip: Items with an asterisk or in yellow are required.


When you place your mouse cursor over any activefield, filing instructions provide detailed informationon how to complete the field. (Same for new SAR.)

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Critical fields have a yellow background. If you failTo complete a critical field, you can’t submit theform. (Same for new SAR.)


� There is now an “Unknown” box.� Check this when the information is unknown or

unavailable� Do not enter responses such as “Unknown,” “Not

Applicable,” or “N/A.”� All the above is the same for new SAR.

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� The system will not accept a filing if critical fields in the new SAR or CTR are blank.

� You will see this regardless of form type.

� You can save a template with, for example, institution information on it.

� When using a template or uploading a saved report, click on “Open Existing Form.”

Filers can not access or view previously filed reports, but can obtain tracking information on past report submissions.


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Recommend each filing have a unique name

If you choose “amended,” the DCN/BSA Identifier box must be completed. Once completed, scroll down and complete the online form.

Part I: How to file the CTR

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Person Involved in the Transaction

� Specify the role of the person in the transaction.

� Give the name of the person in the transaction.

� Check whether there were multiple transactions by the person

Tip: Check “Multiple transactions “ when reporting multiple transactions that were conducted by the person recorded in Part I during a single business day.

Person Involved in the Transaction

If an armored car contracted by the customer transports funds, complete a Part I on the armored car service driver (select 2d). Also, complete a Part I on the person on whose behalf the transaction was conducted (select 2c).

If an armored car is contracted by the financial institution, then select “Armored car” in Item 24 and complete a Part I on the customer on whose behalf the transaction was conducted (select 2c).

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New Fields

� Two new fields:

� Gender

� NAICS Code

If no NAICS Code is appropriate, use a specific descriptive word in the occupation field instead. “Retired” is not adequate.

Hint: If a business with a DBA conducts a transaction, enter the DBA name here.

Recording Identification Presented

� Can record foreign IDs.

� May use “Other” box to

record ID’s other than

those listed.

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Cash-in and Cash-out Amounts

� Cash in amounts and accounts involved for the person in Part I

� Cash out and accounts involved for person in Part I

Part II: Amount and Type of Transaction

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Amount and Type of Transaction

� Check armored car if involved currency pick-up or delivery by an armored car service under contract to the financial institution


� Check “Aggregated transactions” if the financial institution did not identify any of the transactors because the CTR reports aggregated transactions each of which was below the reporting requirement.

� This is not the same as Item 3, Multiple transactions may involve transactions that are above the reporting requirement.

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Q: In the CTR, when would I use the “Multiple Transactions” box and when would I use the “Aggregated Transactions” box? Scenario I, Part I:

Person A conducts several related deposits throughout a single business day, that total over $10,000, into one account and the financial institution obtained identifying information on Person A.

Possible Scenario 1: If the account, where the funds were deposited, belonged to Person A, then the financial institution would complete a Part I on Person A and select box 2a (Person conducting transaction on own behalf) and Item 3 (Multiple Transactions).


Q: In the CTR, when would I use the “Multiple Transactions” box and when would I use the “Aggregated Transactions” box?

Scenario I, Part 2:

Person A conducts several related deposits throughout a single business day, that total over $10,000, into one account and the financial institution obtained identifying information on Person A.

Possible Scenario 2: If the account, where the funds were deposited, belonged to someone else other than Person A, then the financial institution would complete a Part I on Person A and select box 2b (Person conducting transaction for another) and Item 3 (Multiple Transactions); additionally, the financial institution would complete a Part I on the owner of the account where the funds were deposited and select box 2c (person on whose behalf transaction was conducted) and Item 3 (Multiple Transactions).

See next slide…

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This is how you would complete Part I on Person A if the account belonged to someone other than Person A.

This is how you would complete Part I on the Owner of the account if the account belonged to someone other than Person A.



Scenario II:

A bank receives two night deposits (each transaction below the reporting threshold) that totaled over $10,000 that are to be deposited into one business account.

The financial institution would file a CTR by completing a Part I on the entity to which the account, where the funds being deposited, belongs by selecting Item 2c (Person on whose behalf transaction was conducted) and Item 3 (Multiple Transactions). Additionally, the financial institution would select “Night Deposit” in Item 24 as no identifying information on the transactor was collected; “Aggregated Transactions” would not be selected in this scenario as none of the deposits was a teller transaction.

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Scenario III:

Multiple individuals deposit $13,000 each into one business account throughout one business day.

The financial institution would file a single CTR by completing a Part I on the entity to which the account, where the funds being deposited, belongs by selecting Item 2c (Person on whose behalf transaction was conducted) and Item 3 (Multiple Transactions). The financial institution would also complete a Part I for each of the transactors by selecting Item 2b (Person conducting transaction for another) and documenting the amounts deposited by each of the transactors in Item 21 (Cash In) of their corresponding Part I’s.

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This is how you would complete Part I on the entity to whom the account belongs.

Complete Part I in this manner on each one of the transactors.

Continued on next slide…


13,000.00

Document the amounts deposited by each of the transactors in Item 21 (Cash In) of their corresponding Part I’s.

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� Cash in – Record the Cash In amounts for the currency transaction(s).

� May aggregate same type of Cash In transactions in this section

� Total Cash in line will be automatically populated


� Cash Out – record Cash Out amounts for the currency transaction(s)

� May aggregate same type of Cash Out transactions in this section.

� Total Cash Out line automatically populated.

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� Record, in foreign currency, the amount of currency received or disbursed by the financial institution and record the country that issued the currency.

� Do not enter U.S. dollars.

Part III: Financial Institutions Where Transaction(s) Takes Place

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Financial Institutions Where Transaction(s) Takes Place

Filers may add additional Part III sections to record information about multiple financial institutions where related reportable transactions occurred.


� Different financial institutions, one form.

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Select the primary regulator


� RSSD – A unique ID number assigned by the Federal Reserve for all financial institutions, main offices, as well as branches.

� If unknown, go to www.ffiec.gov/find/callreportsub.htm

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� Contact office and phone number required.

� Date auto-populated when report is digitally signed.

Need Help?

You can find technical specifications and line item fling instructions for the new CTR at:

http://bsaefiling.fincen.treas.gov/news/FinCENCTRElectronicFilingRequirements.pdf

Not included with materials because it is 74 pages.

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THE NEW SAR

Features of the new SAR

� May attach .csv files if you need to document transaction records that are too numerous for Part V.

� Don’t substitute attachments for a narrative.

� Confidentiality rules apply to attachments as well.

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Step 1: Filing Institution Contact Information

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Step 1: Filing Institution Contact Information

Step One: Filing Institution Contact Information

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Step 2: Info about FI where activity occurred


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If suspicious activity occurred at a branch or office, complete this section.

Step 3: Subject Information

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Step 4: Suspicious Information


� When completing items 29 through 38, check all that apply:

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Tip: Check “Selling location” if the branch sold one or more of the products recorded in Items 39 or 40 to a customer. Check “Paying location” if customer received payment from branch for one or more of the products in 39 or 40. If both happened at the branch, check both.

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Step 5: Narrative

Step 5: Narrative

� As mentioned, you can now add an attachment to an SAR.

� The number of characters that may be entered into the narrative has changed because of the attachment.

� The attachment does not substitute for the narrative.

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Technical Specifications and line item Filing Instructions may be found in Attachment C located at:

http://bsaefiling.fincen.treas.gov/news/FinCENSARElectronicFilingRequirements.pdf

Need Help?

You can find technical specifications and line item fling instructions for the new SAR at:

http://bsaefiling.fincen.treas.gov/news/FinCENSARElectronicFilingRequirements.pdf

Not included with materials because it is 126 pages.

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KEYS TO WRITING A COMPLETE AND SUFFICIENT NARRATIVE

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Do not assume the reader is familiar with your institution’s internal terminology, acronyms, operational processes, or has other knowledge related to the reported violation.

Do not assume the reader is familiar with your institution’s internal terminology, acronyms, operational processes, or has other knowledge related to the reported violation.

Terms in the SAR Narrative

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The Narrative should:The Narrative should:

� Be concise & clear

� Provide a detailed description of the known or suspected criminal violation or suspicious activity

� Identify the essential elements of information (the 5 W’s)

� Be chronological & complete

� Be concise & clear

� Provide a detailed description of the known or suspected criminal violation or suspicious activity

� Identify the essential elements of information (the 5 W’s)

� Be chronological & complete

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� The 5 “W’s” of Information� The 5 “W’s” of Information

“How?”can be important, too!“How?”can be important, too!

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�Who is conducting the criminal or

suspicious activity?

�Who is conducting the criminal or

suspicious activity?

Describe additional details about the suspect(s) other than those provided earlier in the SAR form (Part I for SAR-MSB, SAR-SF & SAR-C or Part II for the depository institution SAR) :

Describe additional details about the suspect(s) other than those provided earlier in the SAR form (Part I for SAR-MSB, SAR-SF & SAR-C or Part II for the depository institution SAR) :

– Employer & occupation information– Employer & occupation information

– Relationship between the suspect & the

filing institution

– Relationship between the suspect & the

filing institution

– Length of the financial relationship– Length of the financial relationship

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� What instruments or mechanisms facilitate the suspect activity/transactions?

� What instruments or mechanisms facilitate the suspect activity/transactions?

Identify & describe the transactions raising

the suspicions of the financial institution.

Examples include:

Identify & describe the transactions raising

the suspicions of the financial institution.

Examples include:

– Cash deposits and/or withdrawals– Cash deposits and/or withdrawals

– Checks & other monetary instruments

(money orders; traveler’s checks;

cashiers or bank checks)

– Checks & other monetary instruments

(money orders; traveler’s checks;

cashiers or bank checks)

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Wire or other electronic transfers (ATM,

ACH)

Cash Letters, Pouch Activity or other correspondent account activity

Stocks, bonds or notes

Casino chips or markers

Foreign currency

Wire or other electronic transfers (ATM,

ACH)

Cash Letters, Pouch Activity or other correspondent account activity

Stocks, bonds or notes

Casino chips or markers

Foreign currency

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� Additional types of transactions

raising the suspicions:

� Additional types of transactions

raising the suspicions:

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�When did the criminal or suspicious

activity occur?

�When did the criminal or suspicious

activity occur?

If a one-time occurrence, identify the dateIf a one-time occurrence, identify the date

If a pattern of activity occurred

over a span of time, state when

the activity first initiated and

then describe the activity during

the duration

If a pattern of activity occurred

over a span of time, state when

the activity first initiated and

then describe the activity during

the duration

Identify when the activity was

detected

Identify when the activity was

detected

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�Where did the suspicious activity take place?

�Where did the suspicious activity take place?

Identify the branch/department location or locations within the institution where the activity occurred (name of branch, office or department and the street address for each)

Identify all account numbers & types of accounts affected by the transactions/activity.

Indicate if suspect transactions involve other domestic or international banks & identify the banks, their locations, account numbers, etc.

Identify the branch/department location or locations within the institution where the activity occurred (name of branch, office or department and the street address for each)

Identify all account numbers & types of accounts affected by the transactions/activity.

Indicate if suspect transactions involve other domestic or international banks & identify the banks, their locations, account numbers, etc.

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� Why is the activity or transaction suspicious (cont.)?

� Why is the activity or transaction suspicious (cont.)?

Describe concisely but fully,

why the institution considers

the activity as suspicious

Describe concisely but fully,

why the institution considers

the activity as suspicious

Be sure to include any relevant

information about suspicious

customer activity that the

institution has in its files at the

time the SAR is filed

Be sure to include any relevant

information about suspicious

customer activity that the

institution has in its files at the

time the SAR is filed

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� How did the suspicious activity occur?� How did the suspicious activity occur?

– In a concise, accurate and logical manner, describe how the suspect transaction or pattern of transactions were completed

– For account activity, provide as completely as possible an explanation of the cycle of funds including the source of the funds in the account & application of those funds

– In a concise, accurate and logical manner, describe how the suspect transaction or pattern of transactions were completed

– For account activity, provide as completely as possible an explanation of the cycle of funds including the source of the funds in the account & application of those funds

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Suggested structure of the narrativeSuggested structure of the narrative

1. Introduction

2. Body

3. Conclusion

1. Introduction

2. Body

3. Conclusion

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1. The Introduction 1. The Introduction

� Provide a brief statement of the SAR’s purpose

� Generally describe the known or

suspected violation

� Identify the date of any SARs

previously filed on the subject & the

purpose of that SAR

� Indicate any internal investigative

numbers used by the filing institution to maintain

records of the SAR

� Provide a brief statement of the SAR’s purpose

� Generally describe the known or

suspected violation

� Identify the date of any SARs

previously filed on the subject & the

purpose of that SAR

� Indicate any internal investigative

numbers used by the filing institution to maintain

records of the SAR

782. The Body 2. The Body

Provide the relevant facts about all

parties facilitating the suspect activity

or transactions

Provide the relevant facts about all

parties facilitating the suspect activity

or transactions

Answers: Who?Answers: Who?

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2. The Body (cont.)2. The Body (cont.)

Identify all involved accounts and

transactions in chronological order by date

and amount – do not use or insert tabular

objects, tables, or pre-formatted spread

sheets

Identify all involved accounts and

transactions in chronological order by date

and amount – do not use or insert tabular

objects, tables, or pre-formatted spread

sheets

Answers:What.When.Where.

Answers:What.When.Where.


Explain in detail the filer’s position that the

activity or transaction is illegal or suspicious

Explain in detail the filer’s position that the

activity or transaction is illegal or suspicious

Answers: Why?Answers: Why?

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Describe the method of operation of the subject:

� Manner in which the activity and/or transactions were completed;

� Any relationship to other transactions, accounts, conductors, etc.; and

� Subsequent results of the activity

Describe the method of operation of the subject:

� Manner in which the activity and/or transactions were completed;

� Any relationship to other transactions, accounts, conductors, etc.; and

� Subsequent results of the activity

Answers How?Answers How?

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3. The Conclusion3. The Conclusion

Summarize the report & include:Summarize the report & include:

Any planned or completed follow-up actions

by the institution

Names & telephone numbers of persons with

additional information about the reported

activity

Any planned or completed follow-up actions

by the institution

Names & telephone numbers of persons with

additional information about the reported

activity

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Important ReminderImportant Reminder

Do not include any supporting

documentation or attachments

to the SAR when filed

Do not include any supporting

documentation or attachments

to the SAR when filed

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Financial institution shall retain for

5 years from the date of the filing:

Financial institution shall retain for

5 years from the date of the filing:

A copy of any SAR filed; and

The original or business record of any

supporting documentation; and

Make all supporting documentation

available to FinCEN & any appropriate law

enforcement agencies or regulatory

authorities

A copy of any SAR filed; and

The original or business record of any

supporting documentation; and

Make all supporting documentation

available to FinCEN & any appropriate law

enforcement agencies or regulatory

authorities

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Another Important ReminderAnother Important Reminder

Federal law requires that a financial institution, & its directors, officers, employees, and agents who, voluntarily or by means of a suspicious activity report, report suspected or known criminal violations or suspicious activity may not notify any person involved in the transaction that the transaction has been reported.

Federal law requires that a financial institution, & its directors, officers, employees, and agents who, voluntarily or by means of a suspicious activity report, report suspected or known criminal violations or suspicious activity may not notify any person involved in the transaction that the transaction has been reported.

Attached Resources

� Getting Started with the BSA E-Filing System

� BSA E-Filing System FAQs� FinCEN Guidance on Filing CTR and SAR

� Important Notice to BSA E-Filers – Oct. 2012� Updated Technical Specifications for new SAR, CTR

and DOEP

� Final Notice of the adoption of e-filing

� FinCEN Guidance CTR Aggregation for Businesses with Common Ownership

� Notice to Customers: A CTR Reference Guide (English and Spanish)

� FinCEN Guidance on Preparing A Complete and Sufficient SAR

Documents

THE NEW CTR - IBAT · 11/30/2012 1 bsa/aml: the new ctr & sar shannon phillips deputy general counsel independent bankers association of texas san antonio area bankers