Table of ConTenTs - FinCEN.gov

1 Table of ConTenTs Table of ConTenTs INTRODUCTION 1. Objectives of Manual 2. Structure of Manual 2. money Services Business - Overview 4. Typical Management Structure of an MSB 4. Branches and/or Agents 5. General Scope of the BSA Regulations 6. Overview of Check Cashers 6. Basic Model of a Check Casher 6. Overview of Currency Dealers or Exchangers 7. Overview of Issuance, Sale, and Redemption of money Orders/Traveler's Checks 7. Issuer or Redeemer 8. Sale of money Orders/Traveler's Checks for National Companies 8. Overview of a money Transmitter 9. Basic Business Model of a money Transmitter 10. Transaction Flow of a money Transmitter 12. Overview of Principal and Agent MSB Relationships 13. EXAMINATION OVERVIEW AND procedures FOR ASSESSING BSA COMPLIANCE 14. Risk-Based Approach to BSA Examinations 14. Principal MSB Examinations Versus Agent MSB Examinations 15.

2 Pre-Planning the BSA Examination Overview 17. Information Available from fincen Database (Web CBRS) 18. Risk Assessment 19. Identifying Specific Risk Categories 20. Product Risk 20. Customer Risk 20. Geographic Risk 21. Operational Risk 22. Analysis of Specific Risk Categories 22. Review of the MSB BSA/AML Risk Assessment 23. Examiner Development of a BSA/AML Risk Assessment 24. Developing a Risk-Based Examination Plan 26. BSA Examination Program Elements 27. Transaction Testing 28. Bank Secrecy Act/Anti- money laundering Examination Manual for . money Services Businesses Table of ConTenTs Examination procedures 29. Pre-Planning the BSA Examination 29. Pre-Plan procedures 29. Risk Assessment 32. Developing a Risk-Based Examination Plan 32. Transaction Testing Plan 33. MSB Registration Requirements Overview 34. MSB Agent List 35. Examination procedures 37.

3 MSB Registration Requirements 37. On-site Examination and Interview of Appropriate Personnel Overview 38. Interview 38. Examination procedures 41. On-Site Examination and Interview of Appropriate Personnel 41. Anti- money laundering Program Overview 43. Developing a Risk-Based AML program The Four Pillars 44. 1. Internal Controls 44. A. Management's Risk Assessment 46. MSB's Updating of the Risk Assessment 46. B. Control Environment 47. C. Internal Control Activities 47. D. Information and Communications 49. E. Internal Control Monitoring 49. F. Responding to Law Enforcement Inquiries and Requests 50. G. Principal MSB Monitoring/Oversight procedures 50. H. Requirements for MSBs with Respect to Foreign Agents or Foreign Counterparties 51. 2. Designation of BSA Compliance Officer 52. 3. Independent Review 52. Timing of the Independent Review 53.

4 Documentation and Follow-Up 53. 4. Training 54. Examination procedures 55. Anti- money laundering Program 55. Risk Assessment 55. Internal Controls 55. Principal MSB Monitoring/Oversight procedures 56. Additional Examination Procedure for Branch/Agent Monitoring/. Oversight Based on Risk 57. Requirement for MSBs with Respect to Foreign Agents or Foreign Counterparties 57. Bank Secrecy Act/Anti- money laundering Examination Manual for ii money Services Businesses Table of ConTenTs BSA Compliance Officer 59. Independent Testing 59. Training 60. Preliminary Evaluation 61. Recordkeeping Requirements Overview 62. Recordkeeping Requirements 62. Records to be Maintained for Issuance or Sale of money Orders/Traveler's Checks 62. Records to be Maintained for Transmittals of Funds 63. Records to be Maintained by Currency Dealers or Exchangers 65. Examination procedures 68.

5 Recordkeeping Requirements 68. Records to be Maintained for Issuance or Sale of money Orders/ Traveler's Checks 68. Additional procedures Based on Risk 69. Records to be Maintained for Transmittals of Funds 70. Additional procedures Based on Risk 70. Records to be Maintained by Currency Dealers or Exchangers 71. Additional procedures Based on Risk 71. Evaluating the MSB's Compliance with Recordkeeping Requirements 71. Record Retention Requirements Overview 72. Examination procedures 74. Record Retention Requirements 74. Evaluating the MSB's Compliance with Record Retention Requirements 74. Currency Transaction Reporting Overview 75. Aggregation of Currency Transactions 75. Filing Time Frames and Record Retention Requirements 76. CTR Back Filing 76. Examination procedures 77. Currency Transaction Reporting 77. Transaction Testing 77. Additional Examination procedures for Check Cashers Based on Risk 79.

6 Additional Examination procedures for Issuance or Sale of money Orders/Traveler's Checks Based on Risk 79. Additional Examination procedures for money Transmitters Based on Risk 80. Additional Examination procedures for Currency Dealers or Exchangers Based on Risk 80. Evaluating the MSB's Compliance with Currency Transaction Reporting Requirements 81. Bank Secrecy Act/Anti- money laundering Examination Manual for iii money Services Businesses Table of ConTenTs Suspicious Activity Reporting Overview 82. Clearance Review - $5,000 Threshold 83. Systems to Identify, Research, and Report Suspicious Activity 83. Manual Transaction Monitoring 84. Transmittals of Funds Records 84. money Orders/Traveler's Checks Records 84. Currency Dealers or Exchangers Records 85. Automated Monitoring 85. Identifying Underlying Crime 86. Law Enforcement Inquiries and Requests 86.

7 SAR-MSB Decision-Making Process 87. Timing of a SAR-MSB Filing 89. SAR-MSB Filing on Continuing Activity 90. SAR-MSB Quality 90. Prohibition of SAR-MSB Disclosure 91. Safe Harbor 91. Examination procedures 92. Suspicious Activity Reporting 92. Review of Policies, procedures , and Processes 92. Evaluating Suspicious Activity Monitoring Systems 92. Manual Transaction Monitoring 92. Automated Transaction Monitoring 93. Evaluating the SAR-MSB Decision-Making Process 93. Transaction Testing 94. SAR-MSB Reporting 94. Testing the Suspicious Activity Monitoring System 94. Additional MSB Examination procedures for Issuance or Sale of money Orders/Traveler's Checks Based on Risk 95. Additional Principal MSB Examination procedures for money Transmitters Based on Risk 95. Additional Examination procedures for Currency Dealers or Exchangers Based on Risk 95.

8 Evaluating the MSB's Compliance with Suspicious Activity Reporting Requirements 97. Foreign Bank and Financial Accounts Reporting Overview 98. Examination procedures 99. Foreign Bank and Financial Accounts 99. International Transportation of Currency or Monetary Instruments Reporting Overview 100. Examination procedures 101. International Transportation of Currency or Monetary Instruments Reporting 101. Additional Examination procedures Based on Risk 101. Bank Secrecy Act/Anti- money laundering Examination Manual for iv money Services Businesses Table of ConTenTs Evaluating the MSB's Compliance with International Transportation of Currency or Monetary Instruments Reporting 101. Developing Conclusions and Finalizing the Examination Overview 102. Examiner Determination of the MSB's BSA/AML Aggregate Risk Profile 102. Examination procedures 103.

9 Developing Conclusions and Finalizing the Examination 103. Supporting Workpaper Documentation 104. Preparing the BSA Report of Examination 105. Closing Conference 106. Handling Initial Notification of and Response to Violations 106. APPENDIX A BACKGROUND 107. Role of Federal and State Government Agencies in the BSA 110. fincen 110. Internal Revenue Service 110. money laundering and Terrorist Financing 111. money laundering 111. Terrorist Financing 112. Criminal Penalties for money laundering , Terrorist Financing, and Civil Penalties for Violations of the BSA 114. APPENDIX B BSA LAWS AND REGULATIONS 115. APPENDIX C RISK MATRIX 118. APPENDIX D SAMPLE REQUEST LETTER AND DOCUMENTS FOR MSBS 124. APPENDIX E fincen SAR QUALITY GUIDANCE 126. APPENDIX F SAR SUPPORTING DOCUMENTATION GUIDANCE 131. APPENDIX G SAMPLE MSB INTERVIEW QUESTIONS 134. APPENDIX H GUIDANCE FOR MSBS WITH FOREIGN COUNTERPARTIES.

10 OR AGENTS 141. APPENDIX I CHART OF RECORDKEEPING REQUIREMENTS 148. APPENDIX J RECORDS COMMONLY FOUND AT MSBS 151. Bank Secrecy Act/Anti- money laundering Examination Manual for . money Services Businesses Introduction Introduction This Bank Secrecy Act/Anti- money laundering Examination Manual for money Services Businesses provides guidance to examiners for performing Bank Secrecy Act (BSA). examinations. As the administrator of the BSA, the Financial Crimes Enforcement Network ( fincen ). has delegated authority to the Internal Revenue Service (IRS) to examine the anti- money laundering (AML) program of money services businesses (MSBs). 1. An effective AML program requires sound risk management; therefore, the manual also provides guidance on identifying and controlling risks associated with money laundering and terrorist financing. The manual contains an overview of AML program requirements, BSA/AML risks and risk management expectations, sound industry practices, and examination procedures .