Women in Banking October 29-30, 2020...Montana Banker News October 2020 Page 1 Cary Hegreberg (left), President and CEO of the Montana Bankers ... were able to obtain — to the pandemic,

Montana Banker News October 2020

Page 1

Cary Hegreberg (left), President and CEO of the Montana Bankers Association and Dan Villa (right), Executive Director of the Board of Investments on Helena’s “Last Chance Gulch” walking mall. MBA has been working closely with Villa since April, crafting, refining and implementing a loan deferment program for businesses and subsequently a working capital program, both administered by community banks throughout Montana.

Please help us distribute your articles andpromotions. Send pieces which are informative

to bankers, discuss relative trends, & best practices.

Send to: [email protected]

Women in Banking October 29-30, 2020 MBA Women in Banking Hybrid Conference, October 29-30, Meaningful Influence, Resiliency & Exquisite Virtual Leadership with Nikki Dixon-Foley of FutureSYNC and Holly Hoffman, the last remaining member of the Espada Tribe and the last woman standing on Season 21 of CBS’ hit reality show “Survivor Nicaragua”. Through that experience, and others throughout her life, Holly was inspired to share her message of survival. Sponsored by Stockman Bank.Register HERE

https://www.montanabankers.com/event/2020WIB

BANKER NEWS LEADERSHIP & ADVOCACY SINCE 1904

Page 2

Do you wear boxers or briefs?

You would never ask a customer that! You would also never text a customer for secure information such as their PIN or password because banks NEVER ask that. Nonetheless, banks of all sizes are suffering significant monetary and reputational losses from increasingly sophisticated phishing scams that trick your customers into providing this information.

ABA wants to change this. We’re calling on all banks across the country—members and nonmembers alike—to participate in the #BanksNeverAskThat anti-phishing campaign—a fresh, bold plug-and-play campaign created to educate consumers about phishing scams and how to spot them.

Register your bank and receive a robust toolkit full of ready-to-use assets. Designed to be humorous, eye-catching and engaging, the kit includes videos, GIFs, social posts, printables, media materials and more. The campaign is FREE (including for non-ABA members) and can be co-branded, bank-branded or ABA-branded.

Join us in kicking off your #BanksNeverAskThat campaign on Oct.1 to coincide with National Cybersecurity Awareness Month.

Register now.

#BankersNeverAskThatFight phishing fraud with this free, ready-made campaign from ABA

BankMarketingCenter.com’s web-based marketing portal offers thousands of professionally designed, customizable print and digital templates and access to millions of Getty images. What’s more, the low monthly cost is probably less than what you would pay a designer for a few hours of work. But, it gets better!

Sign up for BankMarketingCenter.com and you’ll get the remainder of 2020 Free. *Available to new clients only.

Learn more about BankMarketingCenter.com by scheduling a personal tour today.

Fast forward with BankMarketingCenter.com

Women in Banking October 29-30, 2020

https://www.aba.com/advocacy/community-programs/banksneveraskthat?utm_campaign=Phishing-Campaign_Banker-Reg_GenLaunch_E2_20200917.html&utm_medium=email&utm_source=Eloqua&elqTrackId=1a11d02c5d2a418d941c15fc8d1b97a2&elq=5add5c6230534131a625296e8b40a65e&elqaid=23956&elqat=1&elqCampaignId=7988BankMarketingCenter.com


Page 3

Advocacy

These institutions recently paired subordinated debt raises to buy back discounted shares in immediately accretive transactions. Leadership of both banks attribute the pair of opportunities — and the pricing they were able to obtain — to the pandemic, and other community banks could make a similar trade.

“What had happened was a perfect storm of an opportunity to buy back at a pretty good discount because of the Covid-19 impact on financial stocks, and the popularity or the market that had developed for subordinated debt,” says Paul Brunkhorst, CEO of Crazy Woman Creek Bancorp in Buffalo, Wyoming.

The bank constructed a twofer trade that would leverage investors’ demand for yield while capitalizing on the persistent discount in its shares. Brunkhorst reached out to a larger in-state financial institution about a $2 million private placement of its subordinated debt at a 5% rate; he says the direct placement kept pricing low for the $138 million bank. Crazy Woman Creek then repurchased 15% of its outstanding common stock. The transactions were included in the same Aug. 18 release.

“It wasn’t taken lightly. We are affecting shareholder value in a positive manner. We’re also incurring this debt, so we better be darn sure of the capital position, the asset quality and the regional economy,” he says. “We were comfortable going after the subordinated debt with the primary reason of repurchasing those shares.”

Executives at Easton, Maryland-based Shore Bancshares decided to pad robust capital levels with an additional $25 million in subordinated debt as “safety capital” at the end of August.

So far, the safety capital hasn’t been needed. Second loan modification requests declined to about 10%, and the $1.7 billion bank has yet to experience defaults. Management decided to deploy $5.5 million of those newly raised funds toward restarting its halted share repurchase program at the beginning of September.

The repurchase, which required sign off from the Federal Reserve, was immediately accretive to tangible book value. If fully exercised, the buyback would reduce share count by 4.5%.

“When you can buy stock back at 60% or 70% of tangible book, that’s probably the best thing you could ever do for your shareholders,” says CEO Lloyd “Scott” Beatty Jr. “In terms of rewarding them, I can’t think of a better way to do it.”

Continued on next page

Why Two Community Banks Raised Debt to Repurchase SharesBy Kiah Lau Haslett, managing editor for Bank Director

The coronavirus pandemic has motivated some banks to raise capital and others to repurchase shares.

Two banks opted to do both.


COVID-19 Resources from Office Depot

Page 4

Advocacy ContinuedBoth executives say shareholders have been pleased with the buyback announcements. They also found the capital raise to be straightforward and relatively quick, with healthy demand and pricing. Brunkhorst says he’s surprised more banks haven’t cut out the middleman to solicit demand and conduct their own private placements. It was Shore’s first time raising sub debt; its offering carried a rating from Kroll Bond Rating Agency and a price of 5.38%.

“I would say probably if you’re thinking about [raising capital], I’d get out there as soon as possible. There’s a lot of activity in this,” Beatty says. “I’d be inclined to pick your investment banker and get out and enter the market as quickly as you can.”

Kiah Lau Haslett is the Managing Editor of Bank Director. Kiah is responsible for editing web content and works with other members of the editorial team to produce articles featured online and published in the magazine. Her areas of focus include bank accounting policy, operations, strategy, and trends in mergers and acquisitions.

Melanie Hall, Montana’s Commissioner of Banking, participated in a virtual mini-conference organized by the MSU Community Banking Program that was offered to students and bankers who support the program. The event featured prominent speakers such as Fed Governor Miki Bowman, CFPB Director Kathy Kraninger, and Rebeca Romero Rainey, in addition to Hall, who was instrumental in securing the other women on the panel. Kudos to Melanie and to Tim Harvey at MSU for “putting Montana on the map!”

Hall Puts Montana on the Map!

MBA Partners with ABA in Offering Useful Election Resources

https://secureamericanopportunity.com/vote-2020/?state=MT

https://secureamericanopportunity.com/vote-2020/?state=MT


Page 5

Advocacy Continued

Dear Banking Leader,

As an industry leader and important member of the Montana Bankers Association, you understand the critical role elected officials play in the day to day operations of our businesses. During this past year, as Chair of the American Bankers Association Ag Committee, I experienced firsthand the influence and credibility ABA has earned in the halls of Congress, which is why I support BankPac and I aminviting you to join your colleagues across the country in making our voices heard.

BankPac's sole purpose is to help elect pro-banking decision makers to federal office. It focuses on lawmakers from both parties who understand the essential role banks play in their communities and is our only mechanism to directly support federal candidates and incumbents. Year in and year out, BankPac contributes more to the campaigns of Montana Congressional candidates than it takes in from Montana bankers, and we need to change that. BankPac allows us to support those lawmakers who want to help expand access to rural credit and understand the importance of bills like ECORA (Enhancing Credit Opportunities in Rural America).

With the pivotal 2020 congressional elections less than 50 days away, I sincerely hope I can count on you to join BankPac. Your sustained commitment and active participation is what will make the difference in 2020.

Together, we are stronger. Thank you for your consideration and your support of ABA.

Heather M. MalcolmVice PresidentBank of the Rockies 2019-2020 Chair of ABA Ag & Rural Bankers Committee

Note: During the current election cycle, BankPac has contributed to the campaigns of Steve Daines for U.S. Senate and Matt Rosendale for the U.S. House of Representatives.

Malcolm urges bankers to support BankPac


Page 6

EducationOne of the major objectives of the Montana Bankers Association is to identify the educational needs of bankers within Montana. This process is organized by banker committees and MBA staff members. Conferences and Workshops on critical topics are offered on a regular basis. For a full list of upcoming webinars and events, please visit MontanaBankers.com.

Webinars

Treasury Management: A Powerful Tool to Increase Deposits and Fee Income - Thursday, October 22nd, 2020 - 12:30 pm MTYou will walk away from this course with a deeper knowledge of Treasury Management, learn to conduct risk assessments on new products, and learn strategies to increase core deposits.Presented by Marci MalzahnRegister HERE

Reporting Critical Information Security - Friday, October 23rd, 2020 - 9am MTWhat do you need to report upstream to help the Board and Executives understand your ISP and risk? Let’s dive in.Presented by Chad Knutson Register HERE

15 Reasons Training Doesn’t Stick - Wednesday, October 28th, 2020 - 9:00am MTWhat’s the difference between learning and training? Why doesn’t training always stick? Who is responsible for “the stick”? Join Vicki Kraai and find out why, at any company, learning isn’t just the job of the training department! You will learn that training isn’t always the right answer to performance problems or enhancements. There is a myriad of reasons why people don’t perform well and a company’s first response often is “we need more training!”Presented by Vicki Kraai Register HERE

SAR Decision Making - Wednesday, October 28th, 2020 - 12:30 pm MTThis program includes a review of the SAR and its data fields.Presented by Deborah Crawford Register HERE

https://www.bankwebinars.com/Webinar/Details/3838https://www.bankwebinars.com/Webinar/Details/3840https://www.bankwebinars.com/Webinar/Details/3851https://www.bankwebinars.com/Webinar/Details/3842


Page 7


Page 8

Great news! Over the summer Glacier Bancorp (GBCI) and its Montana family of banks have offered to cover all of the team fees for the Stock Market Game!

When the schools shifted to remote learning last spring, we noticed our programs that already lived online were the most utilized by students with the encouragement of teachers. With the uncertainty we face rolling into this semester, bringing new partners to support successful games like the Stock Market really helps meet our mission to improve economic and financial literacy for Montana's youth.

Not only will the team fees be waived, but GBCI will be funding the cash team prizes too. For schools participating in the many areas of Montana that GBCI has a bank, we can coordinate classroom visits with financial leaders.

Registration is now open, we shifted to a 9 week program that will start October 12th and will run to

December 11, 2020. For teachers who are not familiar with simulation, the Stock Market Game has increased its resources to assist students and teachers maximize their experience.

You can learn more and register at www.stockmarketgame.org

EventsThe Stock Market Game Fees Waived This Year!

https://mailchi.mp/e6588e9df209/economics-teacher-seminar-registration-open-expenses-paid-renewal-unit-opportunity-4977254?e=632ab0fb22https://mailchi.mp/e6588e9df209/economics-teacher-seminar-registration-open-expenses-paid-renewal-unit-opportunity-4977254?e=632ab0fb22


Page 9

Press Releases

Russ Bailess Bank of the West

Golden, CO

Amanda Burgess Madison Valley Bank

Ennis, MT

Andrew Barkley Wells Fargo Bank Minneapolis, MN

Tyler Barletta FirstBank Aspen, CO

Jeb Bassett American Savings Bank

Honolulu, HI

Michele Bassi Santa Cruz County Bank

Watsonville, CA

Taylor Belcher Bank of Stockton

Stockton, CA

Andy Bembry HomeStreet Bank

Seattle, WA

Kendra Berch FDIC

Walnut Creek, CA

Bobby Black North Cascades Bank

Wenatchee, WA

Andrew Boogusch Pacific Western Bank

Fresno, CA

Tim Boyle Commencement Bank

Puyallup, WA

Annette Brooks Zions Bank

Bountiful, UT

Ben Browning Bank of Utah Ogden, UT

Joe Buckmaster First Tech Federal

Hillsboro, OR

Lawrence Chan Royal Business Bank

Los Angeles, CA

Clint Gillum Wells Fargo Bank

Afton, WY

Stephen Chen Avidbank

Mountain House, CA

Anna Choi Cathay Bank

Chino Hills, CA

Heidi Collins Banner Bank

Spokane Valley, WA

Bridget Cooney Scottsdale, AZ

Sarah Davocato Carvalho River Valley Com. Bank

Gridley, CA

Angelo DeJesus Wells Fargo Bank

Riverton, UT

Joe DePillo First Foundation Bank Newport Beach, CA

Stacey Djou American Savings Bank

Honolulu, HI

Joe Eyre UMB Bank Levan, UT

Kate EyreColumbia Bank

Tacoma, WA

Amanda Fabrizio Wells Fargo Bank

Windsor, CO

Jonathan Fischer Timberland Bank

Hoquiam, WA

Tara Fujita American Savings Bank

Honolulu, HI

Kevin Guo Bank of America

Renton, WA

Matthew Lim Murphy Bank Fresno, CA

Sanjin Handan Mechanics Bank

Folsom, CA

Greg Hansch Commencement Bank

Tacoma, WA

Amy Hart Columbia Bank

Pasco, WA

David Henry First Federal Savings

Port Angeles, WA

Eammon Huang United Pacific Bank

Eastvale, CA

Jessika Jaar-Arango AMERANT Miami, FL

Jill Jacobson Glacier Bank Whitefish, MT

Herman Jopia American Savings Bank

Honolulu, HI

Catherine Kenney Islander Bank

Friday Harbor, WA

Richard Kim Umpqua Bank

Irvine, CA

Josh King Northrim Bank

Maple Valley, WA

Donald Lee Malaga Bank

Palos Verdes Estates, CA

Kathryn Leu First Choice Bank

Cerritos, CA

Jeff Loader Bank of the Sierra

Bakersfield, CA

Kristin Schatz WaFed Bank Cle Elum, WA

Sheri Lucas Wells Fargo Bank San Francisco, CA

Natasha Luddington Pacific Western Bank

Washington, DC

Trevor Mael First Foundation Bank

Rocklin, CA

Adam McDiarmid UMB Bank

Longmont, CO

Joe Neiner Silicon Valley Bank

Mill Valley, CA

Paul Nelson NW Farm Credit

Colbert, WA

Stephanie Olson Citizens Business Bank

Santa Barbara, CA

Kush Patel FHLB of

San Francisco Castro Valley, CA

Kevin Randolph Pacific Western Bank

Los Angeles, CA

Stefanie Reynolds FHLB of

San Francisco Pleasant Hill, CA

Randy Riley Wells Fargo Bank

Missoula, MT

Anna Saakian Mechanics Bank

Roseville, CA

Tracy Sayre Bank of the Pacific

Olympia, WA

Hassan Sheikh U.S. Bank

Las Vegas, NV

Ross Upton WA State DFI Seattle, WA

Dean Smith City National Bank

Granite Bay, CA

Phil Soh Banc of California

Glendale, CA

Tammy Song Royal Business Bank

San Gabriel, CA

Peter Spears Suncrest Bank

Fresno, CA

Bill Speer Five Star Bank Redding, CA

Ryan Speirs Zions Bank

Highland, UT

Selim Stiti Mechanics Bank Walnut Creek, CA

Sarah Suitor Paducah Bank Paducah, KY

Keith Swatzell Columbia Bank Spokane, WA

Charlie Sy BECU

Seattle, WA

Kwong Szeto Metropolitan Bank

Oakland, CA

Patricia Talton Bank of the West

Oakland, CA

Nelson Turla HomeStreet Bank

Seattle, WA

Mike Vasquez Mechanics Bank

Lompoc, CA

James Vopata FDIC

Alma, KS

Mitch Wallace FDIC

Mooresville, NC

Ryan Walrod HomeStreet Bank Lake Stevens, WA

Lauren Waters Zions Bancorp

Salt Lake City, UT

Ben Watkins Zions Bank Boise, ID

Stacy Watkins Lexicon Bank Las Vegas, NV

John Weber Coastal Community Bank

Shoreline, WA

Beth Whisamore Zions Bancorp

Salt Lake City, UT

Christine Whitney Luty Golden Pacific Bank

Davis, CA

Trevor Zahlmann FDIC

Oregon City, OR

Pacific Coast Banking School (PCBS) is pleased to announce the Class of 2020. These executives are celebrating the completion of a rigorous three-year graduate-level educational program designed for leaders in the financial services industry.

Participants attended a two-week resident session in August of 2018 and 2019 on the University of Washington campus in Seattle, Washington. This year, for the first time in its 83 year history, PCBS offered seniors the opportunity to complete their final session virtually.

In addition to attending three sessions of classes, students are required to complete six written extension assignments and an original management report.

Graduates earn an Executive Leadership Certificate from the University of Washington’s prestigious Foster School of Business in addition to their PCBS diploma.

This year’s graduating class consists of individuals representing a diverse mix of financial institutions from seventeen states across the country.

Additionally, one student received the Kermit O. Hanson Award for Excellence, which is awarded for the highest academic achievement at PCBS. Congratulations to John Weber of Coastal Community Bank for this outstanding achievement.

PCBS proudly presents the members of the class of 2020 who join the ranks of over 11,000 prestigious Pacific Coast Banking School alumni.

Pacific Coast Banking School Announces the Class of 2020

MONTANA

Amanda Burgess Madison Valley Bank

Ennis, MT

Jill Jacobson Glacier Bank Whitefish, MT

Randy Riley Wells Fargo Bank

Missoula, MT


Page 10

Press Releases Continued

HELENA – The Montana Bankers Association (MBA) announced today that the organization is joining other business organizations in opposing Montana ballot initiative I-190, which would legalize recreational use of marijuana.

“Marijuana remains an illegal substance under Federal law, which means banks cannot provide services such as checking accounts to marijuana and marijuana-related businesses,” according to Cary Hegreberg, President/CEO of the organization. “Any bank that accepts deposits or handles transactions resulting from the sale of marijuana may be found in violation of Federal laws regarding money laundering. Federal regulators have zero tolerance for it, regardless of what individual states do.”

Hegreberg said until the U.S. Congress either legalizes marijuana or changes anti-money laundering laws prohibiting banks from providing services to marijuana-related businesses, the banking industry and the MBA will remain staunchly opposed to efforts at the state level to incentivize formation of more businesses that cannot be legally served by banks.

“If a marijuana business cannot have bank accounts, and credit card companies cannot establish accounts for them, that’s a lot of cash floating around inviting mischief,” Hegreberg said. “How does the Montana Department of Revenue plan to collect taxes if these businesses can’t write them a check or send a wire? That is just one of many reasons that legal recreational use of marijuana in Montana will backfire and potentially cause great harm.”

About the Montana Bankers Association:

The mission of the Montana Bankers Association is to enriching the lives of all Montanans through strong community-focused banks. This mission is accomplished through efforts such as state and federal legislative and regulatory activities, legal action, communications, research, and education.

Contact: [email protected] Learn more at www.montanabankers.com

MBA opposes legalization of recreational marijuanaMontana Bankers Association Joins Other Montana Business Advocacy Groups in Opposition to the Legalization of Recreational Use of Marijuana in Montana


Page 11

Home Equity Line of Credit (HELOC) scams continue to be a costly and challenging issue for financial institutions. Wire transfer fraud can easily reach millions of dollars, and with advancements in technology, such as online databases for county clerk records, online banking and online title searching, data commonly used by financial institutions to verify customer identity for wire transactions is routinely and easily comprised.

Several financial institutions have fallen victim to losses arising out of wire transfer and check forgery schemes targeting HELOC accounts and have taken action to mitigate the risk of future loss experience. Institutions that place a high value on their customer service and customer confidence in the institution’s security against wire transfer fraud have implemented risk mitigation upgrades to their operations to help solidify customer confidence. According to Travelers, the following steps are initiatives that can help to eliminate, or at least significantly reduce, losses arising out of HELOC fraud scams:

• Place greater emphasis on getting full account numbers from callers;• Phrase verification questions so that the caller is providing the information, rather than simply

confirming what the financial institution has on file;• Remove items from the list of authentication options (such as mother’s maiden name and date of birth)

that have become “public information” through social media websites and venues;• Train employees who field calls to verify authentication items in a specific order and not skip to other

items if the caller cannot verify the requested information;• Train personnel with an updated full fraud-awareness module to help employees identify warning signs

of fraud;• Encourage customers to set up PIN numbers if the automated phone system allows it;• Update customer account files with driver’s license numbers, if not copies of the entire driver’s license

(or other government-issued ID if there is no driver’s license);• Utilize a mandatory callback procedure for all customer-not-present wire transfer requests;• Use a password to authenticate customers rather than commonly compromised information and only

allow in-person modification of passwords and key account information;• Consider requiring full balance transfers (or transfers up to a certain percentage of the available funds) to

be made in person while placing a reasonable monetary limit (or percentage limit) on customer-not- present wire transfer requests;• Establish a reporting procedure which refers all suspicious wire transfer requests to a higher level of

authority for confirmation/processing;• Require a dual telephone confirmation procedure where the financial institution calls the home phone of

the customer as well as an alternate number, such as a mobile phone or work phone;• Establish an automatic two-day holding pattern anytime a request is made to initiate a wire transfer from

a HELOC account to a foreign bank account within which time the financial institution ensures accurateverification and deters fraudsters seeking immediate processing;

• Verify change of address or phone number requests with a call to the customer’s phone number on file;• Customize specific and unique verification questions and procedures with an account holder/customer

that can only be modified in-person.

Technology has made it easier than ever for bad actors to obtain data that is commonly used by financial institutions to verify the identity of their customers. That’s why financial institutions must utilize robust

Continued on next page.

HELOC Article from Travelers


Page 12

• Advisory on Cybercrime and Cyber-Enabled Crime Exploiting the Coronavirus Disease 2019 (COVID-19)Pandemic

• FinCEN Advisory on Imposter Scams and Money Mule Schemes Related to Coronavirus Disease 2019(COVID-19)

• FinCEN Advisory on Medical Scams Related to COVID-19• Companion Notice to FinCEN COVID-19 Advisories• Paycheck Protection Program Frequently Asked Questions• Updated FinCEN Notice to Financial Institutions Regarding COVID-19• FinCEN Notice to Financial Institutions Regarding COVID-19

In these statements, FinCEN encourages financial institutions to communicate concerns related to the COVID-19 pandemic and to remain diligent in detecting related suspicious activity. Hopefully by now, banks have passed the stage where concerns exist over the potential delays in filing required BSA reports – suspicious activity reports (SARs) and currency transaction reports (CTRs) – but know that risk was really for many. So, that brings us to suspicious activity monitoring and reporting, which is a staple of a safe and sound BSA program. By now, suspicious activity, including illicit fraudulent transactions, is not something that is particular new to us, as we have dealt with many types of fraud – ACH, loan and identity theft fraud – just to name a few. But, since FinCEN has suggested that the banking community “remain alert about malicious or fraudulent transactions similar to those that occur in the wake of natural disasters”, we should take a look at the emerging trends connected to COVID-19:

• Imposter Scams – Bad actors attempt to solicit donations, steal personal information, or distributemalware by impersonating government agencies (e.g., Centers for Disease Control and Prevention),international organizations (e.g., World Health Organization (WHO), or healthcare organizations.

• Investment Scams – The U.S. Securities and Exchange Commission (SEC) urged investors to be wary ofCOVID-19-related investment scams, such as promotions that falsely claim that the products or servicesof publicly traded companies can prevent, detect, or cure coronavirus.

Continued on next page

authentication procedures to protect their customers – and themselves – from wire transfer fraud. This includes greater awareness, updated and vigilant policies, procedures and training, and implementing imaginative and unique verification procedures to help reduce the risk of sustaining losses arising out of wire transfer fraud targeting HELOC accounts.

Travelers is committed to managing and mitigating risks and exposures, and does so backed by financial stability and a dedicated team – from underwriters to claim professionals – whose mission is to insure and protect a company’s assets. For more information, visit www.travelers.com.

During normal times, it can be challenging for bankers to get their arms around the regulatory requirements surrounding the Bank Secrecy Act (BSA) and anti-money laundering (AML) regulations. So, when you add in a global pandemic, such as COVID-19, things can get a little dicey especially when navigating competing priorities. Fortunately for us, the Federal regulators have been proactive in providing the banking industry with up-to-date compliance guidance (although it is important to note the guidance did not extended the BSA regulatory reporting deadlines) relating to the pandemic. Furthermore, the Financial Crimes Enforcement Network (FinCEN) went as far as creating a webpage devoted to coronavirus updates. A brief scan of their webpage includes the following advisories:


Page 13

• Product Scams – The U.S. Federal Trade Commission (FTC) and U.S. Food and Drug Administration(FDA) have issued public statements and warning letters to companies selling unapproved ormisbranded products that make false health claims pertaining to COVID-19. Additionally, FinCEN hasreceived reports regarding fraudulent marketing of COVID-19-related supplies, such as certainfacemasks.

• Insider Trading – FinCEN has received reports regarding suspected COVID-19-related insider trading.

When you throw in the reminder regarding the importance of detecting trends related to COVID-19 medical fraud, imposter scams, and cyber-enabled crime, the banking industry has the daunting task of being the watchdog for fraudulent transactions.

Where do we start? Begin with the bank’s system for identifying potential suspicious activity. Most banks have multiple channels that funnel unusual activity to the appropriate party for research and reporting.First, and likely most important, bank employee detection is key. During the course of day-to-day operations, employees may observe unusual or potentially suspicious transaction activity or requests. During this pandemic, it is important employees are aware of the FinCEN emerging trends so they can be aware of potential red flags that may be uncovered. Further, it would be appropriate to share the bank’s own specific unusual activity trends if any are identified based on the bank’s customers, products and services, and geographic location. Second, monitoring systems are designed to detect potential suspicious activity whether manual or automated. For manual monitoring, the goal is usually to identify higher-risk transactions, such as those involving large amounts of cash or those to or from certain geographies, which may need to be tweaked when considering the current FinCEN emerging trends relating to the coronavirus.

Automated account monitoring systems can certainly make it easier to identify individual transactions, patterns of unusual activity, or deviations from expected activity. These systems can capture a wide range of account activity, such as deposits, withdrawals, funds transfers, automated clearing house (ACH) transactions, and automated teller machine (ATM) transactions, directly from the bank’s core data processing system. However, the program parameters and filters should be reasonable and tailored to the activity that the bank is trying to identify or control and may need some fine-tuning based on our current COVID-19 environment. Remember, the battle against suspicious activity has only begun at the identification stage. Once identified, the bank still has the responsibility to review and research the activity and ultimately come to a final SAR decision. If a decision is made to fill a SAR related to the COVID-19 pandemic, it is important to provide information with a high degree of usefulness for government authorities, including law enforcement. FinCEN has requested that appropriate information is included in any report to help identify the fraud, such as:

• If the suspicious activity is related to an ACH payment from a state unemployment insurance program,please clearly mention COVID19 UNEMPLOYMENT INSURANCE FRAUD in field 2 of the SAR (FilingInstitution Note to FinCEN) as well as in the narrative. This will make it much easier for your SAR to getto law enforcement teams working with the states on unemployment fraud.

• Or if the activity involves a counterfeit check or ACH payment for the EIDL program, please also clearlymention COVID19 EIDL FUNDS FRAUD in field 2 of the SAR (Filing Institution Note to FinCEN) andstate this in the narrative, as there are specific prosecutorial teams working on EIDL fraud.

Remember, financial institutions should provide all pertinent available information in the SAR and narrative. The better the story (i.e., the narrative), the more likely it will assist law enforcement identify and act against COVID-19-related crimes. As we continue to do our part to fulfill our BSA regulatory duties, it is important to remember those that may be impacted most – customers and community members. Continue the good fight and remain vigilant during these challenging times and help protect those most susceptible to being taken advantage of from those bad actors.


Page 14

Documents

Women in Banking October 29-30, 2020...Montana Banker News October 2020 Page 1 Cary Hegreberg (left), President and CEO of the Montana Bankers ... were able to obtain — to the pandemic,