The Bank Secrecy Act

SECTION 3 – THE BANK SECRECY ACT

General Overview referred to as the “Bank Secrecy Act.” In an effort to provide assistance to law enforcement, “banks” are required to We’ve no doubt all heard the expres- keep certain records and to make certain sion: “Crime doesn’t pay.” Indeed, when reports regarding currency (and other) a perpetrator of crimes is apprehended, transactions. indicted, convicted, and sentenced he The Bank Secrecy Act (BSA) is per- or she learns that lesson the hard way. haps misnamed. It applies to much more Sad but true, however, is the fact that than just “banks” (as that term is com- pay—at least until the some crime does monly used), and it has more to do with bad guys are apprehended. Or, perhaps divulging secrets than keeping them. Be more accurately, crime reaps payments. that as it may, “Bank Secrecy Act” is a And crime doesn’t usually accept credit term now firmly entrenched in the par- cards—it takes its payment in cold, hard lance of the financial services industry, cash. Whether the crime is blackmail, and it is not likely to be changed any - drug dealing, tax evasion, illegal gam time soon. bling, loan sharking, embezzlement, or a In this section, we will briefly discuss wide range of other types of activity that the various laws that together make up our laws have defined as criminal, the the Bank Secrecy Act. Next we will turn “successful” (the term is used loosely) our attention to the NCUA regulation criminal eventually winds up, somewhere which generally mandates BSA com- along the line, with a pile of currency. pliance for all federally insured credit - But that currency can present a prob unions. Finally, we will discuss the lem for the typical bad guy. In order to particular recordkeeping and reporting put his loot to work for him, a criminal requirements that are at the heart of must eventually re-enter that currency BSA compliance. into circulation. And for as long as there When one thinks of regulatory compli- has been a banking system, the bad guys ance the first thing that usually comes have sought to use it to “launder” their to mind is consumer protection. Many ill-gotten gains by transforming their dirty of the various statutes and regulations money into legitimate sources of funds. with which financial institutions must Law enforcement has its hands full comply are ultimately created with that tracking various bad actors (there never end in mind. The BSA is not, however, seems to be a shortage) in a never- about consumer protection — it is a law ending effort to bring them to justice. enforcement tool. Violations of the vari- Because of the banking system’s large, ous Bank Secrecy Act laws and regula- if unwanted, role in allowing criminals tions can, consequently, expose credit to launder their money, Congress has unions to both civil and criminal penal- passed a collection of laws which are

ties. We will address those penalties Money Laundering Control Act of 1986 separately below. The Money Laundering Control Act of 1986, part of the Anti-Drug Abuse Act of The laws that form 1986, made money laundering a federal the “Bank Secrecy Act” crime. The Act resulted in the following: • Criminalized the act of money As mentioned in the introduction, laundering; terms like “Bank Secrecy Act,” or “BSA,” are frequently used in connec- • Prohibited the act of structuring trans- tion with the compliance duties of finan- actions to evade currency transaction cial institutions, but they do not usually report (CTR) filings; and Introduced refer to a single statute (although, as civil and criminal forfeiture for BSA we will discuss, there is a federal law violations. called the Bank Secrecy Act). Actually, The penalties for those offenses a number of laws and regulations come include imprisonment for a maximum of into play when discussing BSA compli- 20 years, fines up to $500,000 or two ance. Among these laws and regulations times the amount laundered, and forfei- are the Anti-Drug Abuse Act of 1986; ture of assets. the Money Laundering Control Act of 1986; the Bank Secrecy Act of 1970; Bank Secrecy Act of 1970 the Currency and Foreign Transactions Reporting Act; US Patriot Act, Title Perhaps best-known among these III; NCUA Rules and Regulations Part various statutes is the Bank Secrecy 748.2; and the Financial Recordkeeping Act of 1970. This is the federal statute and Reporting of Currency and Foreign that mandates, among other things, that Transactions rules developed by the financial institutions — including credit U.S. Treasury Department and found in unions — maintain certain financial 31 C.F.R. Part 103. records about their members’ and customers’ transactions and that they report Anti-Drug Abuse Act of 1986 certain transactions in currency which involve more than $10,000. This law was enacted to help federal law enforcement’s efforts to thwart The Currency and Foreign illicit drug crops, to stop international Transactions Reporting Regulation drug trafficking, to improve the enforcement of the antidrug laws already on the This law requires that persons file a books, and to establish more effective Report of International Transportation drug abuse and prevention programs. of Currency or Monetary Instruments Among the antidrug enforcement provi- (FinCEN Form 105) whenever they send sions of the Anti-Drug Abuse Act are the or receive more than $10,000 in cur- provisions which make up the Money rency or monetary instruments out of or Laundering Control Act of 1986. into the U.S. As we will discuss later, this statute rarely directly affects credit unions.

The USA PATRIOT Act, Title III: Inter- gram reasonably designed to assure and national Money Laundering Abatement monitor compliance with the recordkeep- and Anti-Terrorist Financing Act of 2001 ing and reporting requirements set forth in the Bank Secrecy Act. NCUA requires This law amends the Bank Secrecy that credit unions’ compliance programs Act and targets money-laundering issues. adhere to the requirements set forth in One provision of this law will require 31 C.F.R. Part 103—the BSA regulations financial institutions, including credit adopted by the U.S. Treasury Department unions, to have minimum standards to with regard to BSA. Each credit union’s verify the identity of its members when plan must be in writing and must be opening accounts. Another provision approved by their board of directors. requires financial institutions to have Section 748.2 requires that the for- antimoney-laundering programs in place. mal BSA compliance plan must: NCUA regulations already require federally insured credit unions to have a com- • Provide for a system of internal con- pliance program in place that is similar trols to assure ongoing compliance per to the antimoney-laundering programs Section 748.2(c)(1). required by this Act. Therefore, credit • Provide for independent testing for unions that are in compliance with these compliance to be conducted by credit requirements will be in compliance with union personnel or outside parties per the antimoney-laundering programs Section 748.2(c)(2). required by this act. Financial institu- • Designate an individual responsible tions are required to search their records for coordinating and monitoring day- (if requested by FinCEN) to determine if to-day compliance per Section the financial institution maintains or has 748.2(c)(3). maintained accounts for, or has engaged in transactions with, individuals or orga- • Provide training for appropriate per- nizations listed on the request. sonnel per Section 748.2(c)(4).

NCUA Rules and Regulations §748.2 31 CFR Chapter X Although the original Bank Secrecy Chapter X of the Code of Federal Act of 1970 applied to credit unions, Regulations contains the nuts and bolts their compliance with that statute was of compliance with credit unions’ and sparse, at best, for many years. But in banks’ reporting and recordkeeping 1986, the NCUA adopted a regulation requirements under the BSA. These which specifically provided rules that Treasury rules broadly define the term credit unions were required to follow to “bank” — and that definition clearly evidence their compliance with the BSA. includes all credit unions, both state- and NCUA Rules and Regulations Section federally chartered. 748.2 sets forth those specific require- FinCEN transferred the BSA regulations ments. Under 748.2 all federally insured found in 31 CFR 103 to a new chapter credit unions must develop and provide (Chapter X) as of March 1, 2011. for the continued administration of a pro-

Reporting Requirements credit union must complete and submit a CTR each time it takes a deposit, gives a withdrawal, or exchanges A number of different reporting currency if the transaction involves requirements are set forth in the BSA currency of more than $10,000 per regulations. For credit unions and other Section 1010.311. traditional financial institutions, the In addition, multiple same-day trans- Currency Transaction Report (FinCEN actions which are completed at any Form 104, or CTR) is far and away the branch of a credit union must be treated most familiar of these reports. Other as a single transaction if the credit union reports required under the regulations has knowledge that those transactions include Suspicious Activity Reports and are by or on behalf of the same individ- Reports of International Transportation ual. If those multiple transactions result of Currency or Monetary Instruments. in total cash into or out of the credit As of April 2013, credit unions must union in excess of $10,000, a CTR must use the Financial Crimes Enforcement be filed. In addition, deposits made at Network (FinCEN) reports available night or over a weekend or holiday must only electronically through the e-filing be treated as if they were made on the system. next business day following the deposit. (Section 1010.313(b).) Currency Transaction Reports It is worth considering a couple of points with respect to the general rule. The Currency Transaction Report First, no CTR is ever required unless the (FinCEN Form 104 or CTR) is a corner- transaction or transactions amount to stone of BSA compliance. In general, a

Figure 3.1 CTR or No CTR? Q. A member deposits a check made out to cash for $15,000 and deposits it into her credit union account. Must a CTR be filed? A. No. A check — even one made payable to cash — is not currency. Q. A member deposits $10,000 worth of $100 bills into his credit union account. Must a CTR be filed? A. No. Although the transaction is in currency, it does not exceed $10,000. Q. A member withdraws $9,000 in currency in the morning from her credit union account. Later that day her teller discovers the same member withdrew $3,000 in currency that same day at another branch of the same credit union. Must a CTR be filed? A. Yes. Same-day withdrawals are aggregated. Q. A member deposits $9,000 in currency in the morning to his credit union account. Later that day his teller discovers the same member withdrew $3,000 in currency that same day at another branch of the same credit union. Must a CTR be filed? A. No. Same-day deposits and withdrawals are not aggregated with each other (although same-day multiple withdrawals are aggregated and same-day multiple deposits are aggregated among themselves).

more than $10,000 in currency com- Exemptions ing into or going out of the credit union. Recognizing that not all transactions Thus, a cash deposit of $10,000 on the involving more than $10,000 in cur- nose would not trigger CTR filing. Figure rency are likely to have value in assisting 3.1 lists a few examples of transactions law enforcement officials investigating and describes whether or not a CTR potential criminal activity, the BSA regu- would be required. lations allow credit unions to exempt Next, the transaction must be in cur- certain transactions from the general rency to be reportable. “Currency” is CTR reporting requirements. A credit defined in the BSA regulations to include union is not required to file a CTR with the coin and paper money of the U.S., respect to a transaction completed by an as well as the coin and paper money of exempt person, provided the transaction any other country that is designated as falls within the exempt person’s stated legal tender. (Section 1010.100(m).) limits. There are two categories (Phase Currency includes U.S. silver certificates, I and Phase II) of potential “exempt U.S. notes and Federal Reserve notes, persons” listed in the BSA regulations. and official foreign notes that are cus- (Section 1020.315(b).) Under the tomarily used and accepted as a medium Phase I designation, transactions in of exchange in a foreign country. excess of $10,000 in currency made by Reportable CTR transactions must be certain entities are eligible for exemp- filed by the credit union within 15 days tion. FinCEN identifies two categories of following the date of the transaction. Phase I exempt persons: CTRs must be filed electronically. You • Any entity (other than a credit union or can access the BSA E-Filing website at bank) whose common stock is listed on http://bsaefiling.fincen.treas.gov/main the New York, American or NASDAQ .html. stock exchanges (with some excep- Under the BSA regulations, credit tions) e.g., public or listed entities. unions have an affirmative duty to verify and record the name and address of a • Any subsidiary (other than a credit member presenting a transaction that union or bank) of any “listed entity” will be reportable on a CTR, along with that is organized under U.S. law and at the identity, account number, and least 51 percent of its stock is owned Social Security or taxpayer identification by the listed entity. number of the person on whose behalf FinCEN issued a final rule in a reportable transaction is to be made. December 2008 that simplified the (Section 1010.312.) If the individual Phase I CTR exemption process. Before claims to be an alien or not a resident of the final rule, credit unions were the U.S., the credit union must verify his required to complete either currency or her identification by reviewing a pass- transaction reports or file a Phase I port, alien identification card, or other exemption for triggering transactions official document evidencing nationality between itself and another depository or residence. institution, U.S. or State governments or entities acting with governmental

authority. This required credit unions to based determination of whether or not file CTRs or file an exemption form for the exemption is appropriate. operating cash transfers between the Credit unions are expected to per- credit union and another institution act- form an annual review of its exemptions ing in a “credit union’s credit union” (Phase I and II) to determine whether capacity. This is no longer the case. or not the exemption is still appropri- Most important, transactions between ate. There is no longer a requirement to a credit union and any of these parties biannually renew or report any change of would receive an automatic exemption control for Phase II exemptions. Credit from CTR filing — similar to that granted unions used to be required to renew to transactions between a credit union Phase II exemptions every two years and and one of the twelve Federal Reserve report any changes in the control of its Banks. Phase II exemption members. FinCEN identifies two categories of To apply for CTR exemption, credit Phase II exempt persons: unions must complete the “Designation • A business—other than a publicly list- of Exempt Person Form” (FinCEN form ed corporation or subsidiary as listed 110) within 30 days of the triggering above—that has maintained a trans- transaction. Until the exemption has action account with the credit union been filed, the credit union would be for at least 2 months; “frequently” (at required to complete CTR forms for each least five per year) engages in transac- applicable transaction. tions in currency with the credit union A number of businesses are ineli- in excess of $10,000; and is organized gible under BSA regulations to receive or incorporated under the law of the “exempt person” status. A business U.S. or a state. (Section 1020.315(b) is ineligible if it is engaged in one or referred to in the regulation as “non- more of the following activities (Section listed businesses”). 1020.315): • Service as financial institutions or • A person or business that has main- agents of financial institutions of any tained a transaction account with the type (examples of financial institutions credit union for at least 2 months; that are not banks include securities operates a firm that regularly with- brokers, check cashers, sellers or trav- draws more than $10,000 (in curren- eler’s checks, or telegraph companies that cy) in order to pay its employees; and wire funds). is incorporated or organized under the laws of the U.S. or a state. (Section • Purchase or sale to customers of motor 1020.315(b) referred to in the regula- vehicles of any kind, vessels, aircraft, tion as “payroll customers”). farm equipment, or mobile homes.

Alternatively, the rule gives a credit • The practice of law, accountancy, or union the ability to forego the 2 month medicine. waiting period (normally required before a Phase II exemption is granted) and • The auctioning of goods. enables the credit union to make a risk-

• The chartering or operation of ships, time, credit unions were required to file buses, or aircraft. CTRs with regard to transactions in currency exceeding $10,000 completed by • Gaming of any kind except licensed those members. parimutuel betting at race tracks. It is important to note that even • Investment advisory services or invest- though a credit union might designate ment banking services. a member as an “exempt person” under these rules, it still has an obligation • Real estate brokerage. to file Suspicious Activity Reports (as discussed below) when circumstances • Pawn brokerage. dictate. FinCEN can revoke the status of • Title insurance and real estate closing. a member as an “exempt person” upon written notice. • Trade union activities.

• Any other activities that may be Geographic targeting specified by the Financial Crimes From time to time, FinCEN may Enforcement Network (FinCEN) — the determine reasonable grounds exist for division of the U.S. Treasury charged requiring additional recordkeeping and/ with BSA enforcement. or reporting requirements under the BSA regulations within a certain geographical The method by which a credit union area. (Section 1010.370 (a).) In these designates a member as an “exempt person” was substantially revised in 1998. cases, the Secretary of the Treasury is Under the regulations prior to 1998, empowered to issue an order requiring credit unions were permitted to grant any domestic financial institution or a - exemptions to various types of members group of financial institutions in a geo graphic area to file CTRs for specially by having the member sign—under pen- alty of perjury— a request for exemption described dollar thresholds. For example, the Secretary could issue an order that listed the reasons the exemption for all financial institutions in a given was sought and that was retained on area to file CTRs for cash transactions file by the credit union. Credit unions which exceed, say, $6,000 in currency, were also required to maintain a centralized “Exempt Transactions Log” as opposed to the usual $10,000. - which included all those members Section 1010.370 describes a spe cial order of this nature will be directed who were exempted from CTR requirements. Credit unions had until July 1, to the chief executive officer of an 2000, to designate those members as affected credit union, and it will clearly “exempt persons” under the new rules describe the types of transactions that - (for example, by completing a CTR as must be reported, including the follow ing: described above). If those members who were exempt under the old rules were • Dollar amount of transactions subject not redesignated as “exempt persons” to special reporting. under the new rules by the appointed • Type of transactions subject to or

exempt from special reporting. • Transaction is designed to evade any requirements of any regulations set • Appropriate form to use if filing special forth under the Bank Secrecy Act. reports. • Offers no business or apparent law- • Address to which special reports must ful purpose or is not the sort in which be filed or which they will be picked the particular member would normally up. be expected to engage, and the credit • Starting and ending dates by which union knows of no reasonable explana- such transactions are to be reported. tion for the transaction after examining the available facts including the back- • Name of a Treasury official to be con- ground and possible purpose of the tacted for any additional information or transaction. questions. These provisions make it illegal to • Amount of time reports and records of “structure” a transaction — that is, to reports generated in response to the break up a single transaction above the order will have to be retained by the reporting threshold into two or more financial institution. separate transactions — if the purpose in structuring the transaction is to evade These special orders may not last the reporting requirement. It is a crimi- more than 60 days unless they are nal violation to “willfully violate” the renewed in exactly the same fashion as antistructuring provisions of the BSA. In described above. (Section 1010.370.) 1993 the United States Supreme Court Unless directed otherwise, a credit held that in order to convict a defendant union that receives an order of this accused of structuring transactions, the nature may continue to use the exemp- prosecution must prove the defendant tions it has already granted members as acted with knowledge that the structur- discussed above. ing he or she undertook was unlawful, not simply that the defendant’s purpose Suspicious Activity Reports was to circumvent the financial insti- A Suspicious Activity Report (SAR) tution’s reporting requirement. (See (Section 1020.320) must be filed with Ratzlaf v. United States, 510 U.S. 135, regard to any transaction that involves or 114 S. Ct. 655.) aggregates more than $5000 when the A SAR must generally be filed within credit union knows, suspects, or has rea- 30 days of the time in which the credit son to suspect that the transaction...” union is aware of the facts that might constitute a basis for filing the form. If • Involves funds derived from illegal no suspect was identified at the time the activities, is intended or conducted credit union first discovered facts which in order to hide or disguise funds or might lead to the filing of an SAR, the assets derived from illegal activities as filing can be delayed up to an additional part of a plan to violate or evade any 30 days. (Section 1020.320.) Federal law or regulation, or to avoid In addition to the rules in Chapter X any CTR requirement.

regarding SAR filing, the NCUA requires tions must provide all documentation that credit unions file an SAR in the fol- supporting the filing of a SAR upon lowing situations (NCUA Final Rule No. request by FinCEN, appropriate law 06-RA-07, 12 CFR Part 748): enforcement, or a supervisory agency. • Whenever any known or suspected The guidance makes clear that no legal criminal violation has been committed process is required for such a request. against a credit union regardless of the In other words, the Right to Financial amount of money involved if the credit Privacy Act requirements (subpoena, union believes the violation was com- summons, search warrant, etc.) aren’t mitted by an “insider” — for example, applicable if: (i) such a request is made a director, officer, employee, agent, or by FinCEN or a supervisory agency dur- other institution-affiliated party. ing the exercise of its “supervisory, regulatory, or monetary functions” or (ii) • Whenever any known or suspected FinCEN, an appropriate agency, or law criminal violation has been commit- enforcement requests a copy of the SAR ted against a credit union involving or supporting documentation underlying $5,000 or more, if the credit union a SAR filing. can identify a possible suspect who is So, what is “supporting documenta- not an insider. tion”? This refers to all documents or records that assisted a financial insti- • Whenever there are transactions aggre- tution in determining that the activity gating $5,000 or more that involve in question warranted a SAR filing. potential money laundering or viola- Examples include account transactions of the Bank Secrecy Act. tion records, new account information, • Whenever any known or suspected e-mail communication, and written cor- criminal violation has been commit- respondence. Supporting documentation ted against a credit union involving varies in each situation. Note, however, $25,000 or more regardless whether that if the information requested goes any suspects have been identified. beyond the scope of what was detailed in the SAR or the SAR’s supporting The SAR must be filed electronically documentation, the Right to Financial with FinCEN through the BSA E-Filing Privacy Act protections apply. system. Supporting documentation is A credit union need not file an SAR not to be filed with the SAR. Instead the for a robbery or burglary committed or credit union must maintain records of attempted as long as that robbery or all SAR supporting documentation for burglary is reported to appropriate law five years from the filing date. (Section enforcement authorities. When complet- 1020.320.) ing the SAR, credit unions should be FinCEN issued guidance (FIN-2007- sure to indicate whether the underly- G003), which clarified how credit unions ing cause of the criminal activity is the should handle requests for supporting result of identity theft, pretext calling, or documentation related to a previously computer intrusion. filed suspicious activity report (SAR). According to FinCEN, financial institu-

SAR confidentiality tion. In instances where the target of a SAR filing is a board member or desig- FinCEN recently updated the BSA nee, the credit union must not notify the regulations to further clarify its expecta- SAR target. However, the credit union is tion with regard to SAR confidentiality. expected to notify the remaining direc- Under the previous regulation, a credit tors or designees who are not suspects. union and its officers, directors, employ- Finally, the final rule does not specify ees, etc. were prohibited from notify- a particular format and credit unions ing any person involved in a suspicious have ample flexibility in tailoring a for- transaction that was the subject of a mat that suits their particular needs. SAR report. To further clarify the scope The Federal Financial Institutions of confidentiality surrounding SAR Examination Council’s (FFIEC) Bank reports, FinCEN issued a final rule and Secrecy Act/Anti-Money Laundering accompanying guidance clarifying SAR confidentiality. According to the final (BSA/AML) Examination Manual gives a rule, credit unions are not to disclose number of reporting options such as pro- the SAR or any information revealing the viding the actual SAR documents (which existence of a SAR to parties other than CUNA does not recommend), providing a those authorized to receive this informa- report that summarizes the SAR filings, tion such as appropriate law enforce- providing tables of SARs filed for spe- ment, regulators, etc. FinCEN notes that cific violation types, etc. it was important to clarify the scope of the confidentiality provision due to the Report of International potentially serious consequences of an Transportation of Currency unauthorized disclosure. Guidance on or Monetary Instruments SAR confidentiality may be found at https://www.gpo.gov/fdsys/pkg/FR-2010- BSA regulations also require that a 12-03/pdf/2010-29869.pdf. Report of International Transportation A credit union that files a SAR may of Currency or Monetary Instruments not notify any person involved in the (FinCEN form 105) be filed whenever reported transaction. And, should an a person sends or receives more than individual inquire of the credit union $10,000 in currency or monetary about whether a SAR has been filed, the instruments (checks, money orders, credit union is required to report this traveler’s checks, etc.) into or out of the inquiry to FinCEN. (Section 1020.320.) U.S. A credit union must file a FinCEN In December 2006, NCUA issued a form 105: final rule (12 CFR Part 748) that now • When the credit union physically trans- requires credit union management to ports, mails, or ships currency and/ “promptly” notify its board of directors or monetary instruments in excess of (or designated committee) of any SAR $10,000 at one time into, or out of, filings. Notification must be at least the U.S. per Section 1010.340; or monthly (usually at the monthly board meeting), unless the activity is serious • When the credit union receives cur- enough to warrant immediate notifica- rency and/or monetary instruments

in excess of $10,000 at one time, Filing forms electronically which has been transported, mailed, or shipped to it by a member from some- The Financial Crimes Enforcement where outside the U.S. per Section Network (FinCEN) provides credit unions 1010.340. access to the BSA E-Filing system (go to bsaefiling.fincen.treas.gov/main.html.) It is important to note that a credit The system supports secure electronic union does not “receive” the currency filing of Bank Secrecy Act (BSA) forms or monetary instruments from outside (either singly or in batches) such as the U.S. if a member deposits the cur- Currency Transaction Reports (CTRs), rency or instruments into a credit union Suspicious Activity Reports (SARs) and account even if the credit union knows Designation of Exempt Person forms that the currency or instruments were (DEP). In addition, institutions can use received or transported from a place this system to send secure messages to outside the U.S. In such a case, the FinCEN and receive responses, when member would have the duty to file appropriate. Finally, FinCEN can use the the report, assuming the member was BSA E-Filing system to issue advisories the person who transported, shipped, and BSA E-Filing system updates to the or received the currency and monetary user community. instruments. The credit union has no duty to inform the member of its duty to file the report, but FinCEN asks that the Recordkeeping credit union do so. Requirements FinCEN Form 114 Part of the initial purpose behind the Although beyond the scope of this various BSA statutes and regulations book, there is one more reporting was the fact that, until the original Bank requirement under the BSA. Those cred- Secrecy Act was passed in 1970, law it unions that have financial account enforcement officials were frequently relationships outside the U.S. that frustrated in their attempts to convict exceed $10,000 are required to file a perpetrators of financial crimes due FinCEN Form 114 on an annual basis. to the lax recordkeeping practices of Credit unions that have such foreign many banks. As such, a great deal of accounts should call FinCEN at 212- the BSA compliance burden lies in its 901-5265 for more information about recordkeeping requirements. A number this form. of specific records that must be retained by financial institutions are listed in the regulations, all of which must be retained for five years. The good news from the standpoint of compliance bur- dens, is that these types of records are now commonplace for financial institutions. Each of the specific recordkeeping

requirements will be discussed in the Records regarding a geographic following paragraphs. Credit unions are targeting order required to retain either the original, or a microfilm, or other copy of each of them As was discussed earlier, there may for at least the five-year period. be instances when the Secretary of Treasury will require a financial institu- Filed reports tion or a group of financial institutions within a geographic area to maintain Records of any report filed pursu- special records with respect to cur- ant to the BSA regulations—Currency rency transactions. The BSA regulations Transaction Reports, Suspicious require that any such records—including Transaction Reports, or Reports of any CTRs filed under such an order— International Transportation of Currency must be retained for as long as is speci- or Monetary Instruments—must be fied in the corder. This record retention retained on file for at least five years. period may not exceed five year per Section 1010.410. Certain credit extensions

Records of each extension of credit Sales of certain monetary in an amount that exceeds $10,000 instruments in amounts between must be maintained, unless the credit is $3,000 and $10,000 secured by real property. These records must include the name and address of If a credit union sells a draft, the borrower, the amount of the loan, the cashier’s check, teller’s check, money nature or purpose of the loan, and the order, or other monetary instrument to a date of the loan per Section 1010.410. person and the purchase is made in currency, it must maintain certain records with regard to such sales. The specific Certain transfers of currency or requirements depend on whether a monetary instruments credit union sells such instruments to a member or a nonmember. (Section Credit unions must maintain either 1010.415.) If a credit union sells one the original or some reproduced form of these instruments to a member in an of each advice, request, or instruction amount of $3,000 to $10,000, it must received or given regarding any transac- maintain a record of: tion resulting in the transfer of currency or other monetary instruments, funds, • The member’s name. checks, investment securities, or credit • The date of purchase. of more than $10,000 to or from any person, account, or place outside the • The type of instrument purchased. United States. Credit unions are also • The serial number of the instrument required to maintain records of similar purchased. cancelled requests, advice, instructions, etc., per Section 1010.410. • The dollar amount of the transaction.

When a nonmember makes such a Certain wire transfers purchase, the credit union is required to retain a record of the above informa- In mid-1996, new rules took effect tion and the purchaser’s address, Social under BSA regulations that mandate the Security Number (or alien identifica- retention of certain wire transfer records. tion number), and date of birth. Credit The records recorded under these new unions are free to implement policies rules are to be retained for five years as by which they require a member who is the case with all other BSA record- wishes to purchase one of these mon- keeping requirements. etary instruments in cash to first deposit Records of wire transfers for less the cash into his account (completing than $3,000 are exempt from these the actual purchase of the instrument recordkeeping requirements as are via a debit to that account). This is per- records of wired transfers governed by missible as long as the credit union’s the Electronic Fund Transfer Act and policy in this regard is written, includes Regulation E and those made through formal procedures for implementation, an automated clearinghouse, automated and applies to all deposit account hold- teller machine, or point of sale system. ers without exception. However, the Under these rules, recordkeep- implementation of such a policy does ing requirements differ depending on not eliminate the record keeping require- whether the credit union is the “originat- ments for such purchases. According ing bank” or the “beneficiary bank” in a to the Financial Crime Enforcement wire transfer. Network’s (FinCEN) November 2002 When a credit union acts as an origi- guidance on this issue, credit unions nating bank, it executes a wire transfer are still subject to the record keeping on behalf of its member. In this case, requirements under Section 1010.415. the credit union must retain a record of: As a practical matter, however, credit • The originator’s name and address. unions will typically not have any dif- ficulty retaining a record of the name, • The amount, date, and payment date of purchase, type of instrument instructions received. purchased, and the dollar amount of the • The beneficiary bank identification. transaction. Note: When this recordkeeping • The beneficiary’s name and address requirement was first mandated by or the beneficiary’s account number if Congress in 1988, it included a require- received with the payment order. ment that credit unions and other finan- When a credit union serves as the cial institutions retain a centralized beneficiary bank in a wire transfer, it is log which contained records of these required to keep a copy of each payment sales of monetary instruments for cash order received. in amounts of $3,000 to $10,000. In Under these wire transfer recordkeep- 1994, this centralized log requirement ing requirements, if the beneficiary is was eliminated. not an “established customer” of the credit union, the credit union must verify

his or her name and address and retain Other Bank Secrecy Act a record of the means used to identify requirements the person (for example, driver’s license, passport, etc.), and a record of the ben- Credit unions are required to retain eficiary’s Social Security number, alien either the original records or copies of all identification number, or employer iden- of the following records with respect to tification number. An “established cus- any account: tomer” is a person with an account with • The signature card. the credit union or a person from whom the credit union has obtained and main- • Each statement or other record for tains on file the person’s name, address, each deposit or share account, show- and taxpayer identification per Section ing each transaction made on the 1020.410. account. There are additional identity verifica- • Each check, draft, or money order for tion rules with respect to individuals more than $100 drawn on the credit who are not “established customers,” union or issued and payable by it. but because credit unions have histori- cally limited wire transfers to members • Each debit of each member’s account or joint owners, many credit unions may in excess of $100. not be familiar with these additional procedures. However, credit unions that • Each check, draft, or transfer of credit intend to offer limited services to certain of more than $10,000 remitted or nonmembers (in light of authority to offer transferred to a person, account, or such services under the 2006 Regulatory place outside of the U.S. Relief Act) should familiarize themselves • Each check, draft, or transfer of with these additional procedures. credit for more than $10,000 received When these rules regarding records directly from a bank, broker or dealer of wire transfers were first introduced, in foreign currency exchange outside there was widespread concern that cred- the U.S. it unions would have to invest in sophis- ticated software through which they • Each receipt of currency, other mon- could instantaneously retrieve records etary instruments, investment securi- of wire transfers which fall within the ties or checks, and each transfer of scope of these rules. However, Section funds or credit of more than $10,000 1020.410 makes clear that the required received on any one occasion from a records must be retrievable by reference bank, broker, or dealer in foreign cur- to the name and or account number of rency exchange outside the U.S. the member who originated the transfer • Records in the ordinary course of busi- or who was the beneficiary of the trans- ness which would be needed for the fer within a reasonable period of time. credit union to reconstruct a transaction (checking) account and to trace a check in excess of $100 deposited in such account through its domestic pro-

cessing system or to supply a descrip- Information Sharing tion of a deposited check in excess of $100. The USA PATRIOT Act of 2001 • A record containing the name, address, encourages information sharing among and TIN, if available, of the purchaser financial institutions for purposes of of each term share certificate along identifying and reporting activities that with a description of the certificate, a may involve terrorist acts or money- notation of the method of payment, and laundering activities. Credit unions and the date of the transaction. associations of financial institutions may share information with other financial • A record containing the name, institutions after they provide notice to address, and TIN, if available, of any FinCEN and agree to maintain adequate person presenting a term share certifi- procedures to protect the security and cate for payment along with a descrip- confidentiality of the information that is tion of the certificate and the date of shared. the transaction. In order to share information (as • Each deposit slip or credit ticket allowed by the USA PATRIOT Act and reflecting a transaction, wire transfer FinCEN) with other financial institu- deposit, or other direct deposit which tions, credit unions must provide an exceeds $100. annual notice to Treasury. A new notice must be completed each year. For extensions of credit (not secured The notification requires credit unions by real property) in excess of $10,000, a to provide: credit union must also retain record of: • Federal ID number; • Name of the borrower • Primary Federal Regulator; • Address of borrower • Mailing address; • Amount of credit extended • Contact person’s name; • Nature or purpose of the loan • Contact person’s title; • Date of the loan • Contact person’s e-mail, telephone, While these record-retention require- and facsimile number. ments amount to a rather lengthy list, it is difficult to imagine a credit union not Once the notification is submitted to retaining all of these records, regardless FinCEN, credit unions may share infor- of the regulatory requirement to do so. mation (regarding money laundering As with all other recordkeeping require- and terrorist financing only) with other ments under Bank Secrecy Act regula- financial institutions and not be liable to tions, these records must be maintained anyone for this type of information shar- for at least five years. ing. The notification may be revoked or suspended by NCUA. If there are any suspicious transactions relating to money laundering or

terrorist activity, credit unions may vol- of a second contact person by sending untarily report that information to law an e-mail or fax to NCUA or FinCEN, if enforcement by completing the SAR and privately insured. calling FinCEN’s Financial Institution’s The Financial Crimes Enforcement Hotline for terrorist activity at 866-556- Network (FinCEN) implemented its 3974. Web-based USA Patriot Act Section The information sharing regulations 314(a) secure communication system also require credit unions to expeditious- in March 2005. The system provides ly search their records when they receive FinCEN with the ability to issue secure a request from FinCEN. FinCEN will act delivery of Section 314(a) subject infor- on behalf of federal law enforcement mation to financial institutions via the agencies investigating money laundering web. Credit unions who receive Section or terrorist activity. FinCEN may require 314(a) requests electronically should any credit union to search its records have already completed the registration to determine whether the credit union process. maintains an account for or has main- When a credit union receives a tained an account during the preced- request, it must expeditiously search its ing 12 months for anyone listed in the records to determine whether it main- request. The credit union also needs to tains or has maintained any account determine if it has engaged in transac- for, or has engaged in any transaction tions conducted by, and funds transfers with any individual, entity, or organi- involving, a named suspect during the zation named in the FinCEN request preceding six months that is required during the time period specified. If the under law or regulation to be recorded by credit union has any questions relating the credit union or is recorded and main- to the scope or terms of the request, it tained electronically by the institution. should contact the Federal law enforce- Each credit union is required to ment agency directly. However, if the sign up in order to receive the FinCEN credit union identifies a matching information requests. Signing up for account or transaction, it must report to a FinCEN request is done with NCUA FinCEN—not the Federal law enforce- as part of the Form 5300 call report. ment agency—the name or account Section 314(a) contact information number of each individual as well as a was added to the March 31, 2003, call Social Security number, date of birth, report, so every credit union will have or other similar identifying informa- registered a contact person. If a credit tion that was provided by the member union needs to change or update its or organization when the account was contact information, it should do so on opened or transaction conducted. the next call report. If changes occur between cycles, the changes or updates need to be given to the appropriate regional office or NCUA examiner. Credit unions can have more than one contact person and should add the information

USA PATRIOT Act’s against various forms of fraud, including the growing incidence of identity theft Customer Identification involving new accounts. Program Requirements The final regulation requires all financial institutions, including credit unions, to implement a “Customer Identification The USA PATRIOT Act of 2001 Program” or “CIP” that requires them to requires the U.S. Treasury Department have procedures in place to get identify- to issue regulations setting forth mini- ing information from anyone opening mum standards for financial institutions an account and to verify that informa- to identify and verify any person who tion. The CIP procedures must enable opens an account. the credit union to form a reasonable belief that it knows the true identity of CIP Requirements the accountholder. The CIP is supposed to be risk based. This means that the Section 326 of the USA PATRIOT Act final regulations do not impose specific requires financial institutions to: requirements but only minimum stan- • Implement reasonable procedures to dards, and a credit union must tailor verify the identity of any person seek- its CIP based on its size, location, and ing to open an account, to the extent membership base. reasonable and practicable. A credit union must apply its CIP to • Maintain records of the information each person establishing a new account used to verify the person’s identity. relationship. This includes not only members but joint accountholders, co- • Determine whether the person appears borrowers, and businesses. on any lists of known or suspected terrorists or terrorist organizations pro- Required information vided to the financial institution by any The final regulation requires credit government agency. unions to get at least four pieces of • Provide the customer opening a new information from each new member/cus- account with notice of the information tomer. At a minimum, the credit union collection requirement. must obtain the person’s: The Treasury Department, National 1. Name Credit Union Administration, and other 2. Date of birth (for an individual) federal agencies issued final regula- 3. Address tions implementing Section 326 of the USA PATRIOT Act in 2003. The aim • Credit unions must get a residen- of the final rule is to protect the U.S. tial or business street address. P.O. financial system from money laundering Boxes are not acceptable. In those and terrorist financing. According to the instances where a member has to be regulators, this rule will have the added contacted by a government investi- benefit of helping to protect consumers gator of some sort, there is a physical address on file.

• If the prospective individual mem- 2. an individual taxpayer identification ber or customer is unable to pro- number (ITIN); vide a residential or business street 3. a passport number and the country address, the credit union may accept of issuance; an address of a friend or relative, or 4. an alien identification card number; an Army Post Office (APO) or Fleet or Post Office (FPO) box number. 5. a number and country of issuance • If the member is participating in on any other foreign government- an address confidentiality program, issued document evidencing the credit union can take the street nationality or residence and bearing address of the ACP office that is a photograph or similar safeguard assisting the member. (perhaps a “similar safeguard” may • The address for a business can be be looking down the pike whereby either the principal place of busi- technology readily exists to identify ness, local office, or other physical thumbprints or eye scans). location of the business. • If someone has applied for a taxpayer identification number but has • The credit union, of course, can not yet received it, the credit union get additional addresses, such as a can still open an account as long mailing address, to meet its own or as it confirms that the TIN applica- the member’s needs. tion was filed before the member/ 4. Identification number customer opens an account, and the • For a U.S. person this means a credit union gets the TIN within a Social Security number (SSN) for an reasonable period of time after the individual or an employer identifica- account is opened. tion number (EIN) for a business. The definition of U.S. person is a Beneficial Owner Rule U.S. citizen or a business, part- Effective May 11, 2018, credit nership, or other legal entity that unions will be required to collect the is established or organized under required CIP information for individuals federal or state law. Note that this that are considered a beneficial owner definition of U.S. person is different of a legal entity that is opening a new than the one used by the IRS which account. A legal entity includes: includes resident aliens. • corporations, • For any non-U.S. person which • imited liability companies, is simply any person or entity not qualifying as a U.S. person, the • other entities that are created by credit union has more flexibility. It filing a public document with a can obtain: Secretary of State or similar office, 1. a Social Security number from a and resident alien;

• general partnerships or any similar Identity verification business entities formed in the US Once the credit union gets all the or a foreign country. required information from the member/ The new rule does not apply to: customer, it must verify identity enough to establish a reasonable belief that it • sole proprietorships, knows the true identity of the person. • unincorporated associations (youth Credit unions have the flexibility to sports leagues), or determine when verification will be done and what methods it will use. Credit • natural persons opening accounts unions should assess their membership on their own behalf. base and the methods used to open There is a two prong test in determin- accounts to determine how they will ing if someone is a beneficial owner verify identity. of a legal entity. The first is “owner- There are two methods credit unions ship”. Each individual, if any, that owns can use to verify identity: through docu- 25% or more of the equity interest of ments or nondocumentary methods. the entity is considered an “owner” in Documents are generally any unexpired regard to the rule. This can be direct government-issued identification evi- or indirect ownership. The second test dencing nationality or residence and is “control”. This is an individual with bearing a photograph or similar safe- significant responsibility for managing guard such as a driver’s license or pass- the legal entity. For example, CEO, COO, port. Once the credit union verifies the President, etc. Based off the two prongs member/customer through a document, here, the number of individuals that it does not have to take steps to deter- meet this definition could be anywhere mine whether the document is valid from 1 to 5. That means you will always (unless it’s obviously fraudulent). have one person defined under the “con- If a credit union chooses this method, trol” prong, and could have up to four its CIP must specify the documents under the “ownership” prong. it will use. This will require the credit The rule requires that you collect union to conduct a risk-based analysis the information on a form that properly of the types of documents it believes will documents that the individuals meet the enable it to know the true identity of its above requirements. FinCEN created a members. form that credit unions can use for col- The credit union can also rely on lecting this information. It can be found nondocumentary methods of verifying under Appendix A of the rule. Once the the identity of its members/customers. beneficial owners have been identified, Nondocumentary methods can be things you would follow your standard CIP pro- like independently verifying the mem- cess. ber’s identity by comparing information provided by the member/customer with information obtained from a consumer reporting agency, public database, or other source, checking references with

other financial institutions, or obtaining cies. These policies would require credit a financial statement. unions to collect additional member Nondocumentary methods are those information (beyond CIP requirements) actions that enable a credit union to during account opening, which would form a reasonable belief that it knows give the credit union an indication of the the true identity of the member/custom- types of transactions a member is likely er by relying on something other than to engage in. In addition, the Beneficial an unexpired government-issued iden- Owner Rule added a requirement that tification. These terms can be tricky credit unions should also create a risk because nondocumentary methods profile for all members. The manual can include things that would typically emphasizes the importance of such poli- be called documents like a financial cies in aiding in the detection of unusual statement. Just keep in mind that as a or suspicious activity and suggests that general rule for individuals, a documen- member/customer due diligence policies tary method of verification is relying on be applied to all members. This includes government-issued documents (such the ongoing monitoring of members, as as a driver’s license or passport) while well as maintaining updated member a nondocumentary method is relying information. on something that is not a government- Enhanced due diligence procedures issued document. should be applied to members and The nondocumentary method will products/services that present a higher probably be used to verify the identity risk for money laundering and terrorist of anyone applying for membership activity. The type and degree of informa- through the mail, Internet, or fax. If the tion sought will vary based on the risks credit union relies on nondocumentary presented by a particular member and methods, its CIP must have procedures the products/services provided. Credit that describe the nondocumentary meth- unions should consider collecting the ods the credit union will use. following information when opening higher-risk accounts: purpose of account; Member/customer due diligence source of funds and wealth; beneficial owners of the accounts (if applicable); NCUA, along with the joint banking member’s occupation or type of business; agencies, released the Bank Secrecy etc. For additional guidance, see “Core Act/Anti-Money Laundering (BSA/AML) Overview—Customer Due Diligence,” Examination Manual. The manual is in the BSA/AML Examination Manual. intended to provide comprehensive guidance to examiners and financial insti- Checking government lists tutions regarding BSA/AML regulatory requirements and best practices. Credit unions must have procedures According to the manual, financial in place for determining whether a institutions (including credit unions) member/customer appears on any list of are expected to develop and maintain known or suspected terrorists or member/customer due diligence poli- terrorist organizations. Currently, no

additional guidance had been issued record is made. on this USA PATRIOT Act requirement. Note, these lists are separate and dis- Notice requirements tinct from the Office of Foreign Assets A credit union must provide adequate and Control (OFAC) list. notice to its members that it is request- ing information to verify identities. A Record retention notice is adequate if the credit union generally describes the identification Credit unions are required to make requirements of the final rule and pro- and maintain a record of all the informa- vides notice in a manner designed to tion they receive from their member. make sure that a member views the This includes name, address, date of notice, or is otherwise given notice, birth, and identification number. These before opening an account. records must be retained for five years This means that depending on the after the date the account is closed. way in which an account is opened, the A credit union’s records must also credit union can provide notice by post- include a description or copy (depending ing the notice in the lobby or on its Web on if permitted by state law) of any docu- site including the notice on its account ment the credit union relied on. This will application or using any other form of be the information it records when veri- written or oral notice. The regulation fying a member’s identity and it must provides sample language that the credit be kept for five years after the record is union can use in its notice. made. The credit union must keep: • A description of any document that was relied on to verify the member’s Penalties for identity; Noncompliance • Any identification number in the document; Credit unions, as corporate entities, as well as individuals (classified as • The place the document was issued; “institution-affiliated parties”) can be and subject to a wide range of penalties for • The date of issuance and expiration, BSA violations. For example, if a CTR is if any. incomplete or inaccurate, a credit union can be fined $500. If it appears that a The credit union must also keep a pattern of negligent violations has devel- description of the methods and the oped, the credit union can be fined up results of any measures that were taken to $50,000. In addition, a credit union to verify the member’s identity and convicted of money-laundering crimes a description of the resolution of any or willful evasion of currency-transaction substantive discrepancy that was dis- reporting laws can be put into receiver- covered when verifying the information ship or conservatorship by NCUA (and received from its member. These records state-chartered credit unions can lose must also be kept for five years after the

their share insurance coverage). Products and Services “Institution-affiliated parties” (a term which includes credit union direc- Affected by the Bank tors, officers, employees, agents, and Secrecy Act even, in some situations, independent contractors like attorneys, appraisers, As mentioned above, one of the or accountants) can be suspended if requirements of the NCUA’s rules they are charged with a violation of the regarding BSA compliance is that the BSA, and permanently removed if the credit union’s compliance program pro- Treasury Department finds that the indi- vide for training of appropriate person- vidual intentionally violated BSA regu- nel. Appropriate personnel include the lations or knew that another individual BSA Compliance Officer, all tellers, the violated BSA regulations. In addition BSA auditor (if the credit union meets to suspension or removal, an individual its annual audit requirement by utilizing could be subjected to a number of civil credit union personnel), and any front- penalties. Depending on the type of vio- line staff who handle member’s trans- lation, a person could face a minimum actions (for example, member service fine of $1,000, up to a maximum fine of representatives). The BSA Compliance $100,000. Finally, individuals convict- Officer should document all training and ed of violating the BSA can face crimi- retain training records for at least five nal penalties of up to $250,000 and/or years. imprisonment for up to five years unless the amount of illegal activity involves more than $100,000 in a 12-month period. In that case, the individual can be subject to a fine of up to $500,000 and/or 10 years in prison. As the reader can see by the range of penalties, violations of the BSA can be severe and thus credit unions are well- advised to make BSA compliance a top priority.

The Bank Secrecy Act

Quiz/Study Guide

1. What triggers the filing requirements for the Currency Transaction Report (CTR) and what is the time frame for filing the report? ______

2. The BSA allows credit unions to exempt certain transactions from the general CTR reporting requirements. These transactions generally have little value in assisting law enforcement investigations. List the categories of potential “exempt persons” listed in the Act. ______

______

3. From time to time, FinCEN may determine that circumstances warrant additional recordkeeping and reporting requirements under the BSA within a certain geographic area. This is called “geographic targeting.” What are some of the special reporting requirements that might be involved as part of this special order? ______

______

4. What does BSA require credit unions to do when a member purchases cashier’s checks, teller’s checks, money orders, or other monetary instruments in amounts of $3,000 to $10,000 if the purchase is made in currency? ______

______5. The BSA specifically excluded certain businesses from qualifying for exempt person status if they engage in certain business activities. List five of these business activities. ______

6. Under the USA PATRIOT Act, what form must be filed with FinCEN before a credit union can share information with another financial institution? ______

7. NCUA requires all federally insured credit unions to have a written Bank Secrecy Act compliance plan that has been approved by the board of directors. This plan must include four separate items. List three of those requirements. ______

8. What four pieces of personal information must be collected from a member opening their first account with the credit union? ______

9. The credit union is only required to verify the new member’s identity to the extent that it forms a “reasonable belief that it knows the true identity of the person.” p True p False

10. After the person’s identity has been verified, are there any other requirements of the CIP rules? ______

11. Posting a notice of the identity verification requirements in the credit union lobby is all the regulation requires. p True p False

The Bank Secrecy Act

Answer Key

1. A credit union must complete and submit a CTR each time it takes a deposit, gives a withdrawal, or exchanges currency if the transaction involves currency of more than $10,000. Also, if multiple same-day transactions result in total cash into or out of the credit union in excess of $10,000, a CTR must be filed. (Page 3-5)

The report must be filed within 15 days after the transaction takes place. (Page 3-6)

2. Potential exempt persons categories: 1) Any entity (other than a credit union or bank) whose common stock is listed on the New York, American or NASDAQ stock exchanges (with some exceptions) i.e., “public” or “listed entities”; 2) Any subsidiary (other than a credit union or bank) of any “listed entity” that is organized under U.S. law and at least 51 percent of its stock is owned by the listed entity; 3) A business—other than a publicly listed corporation or subsidiary as listed above—that has maintained a transaction account with the credit union for at least 2 months; “frequently” (at least five per year) engages in transactions in currency with the credit union in excess of $10,000; and is organized or incorporated under the law of the U.S. or a state. (Section 1020.315 referred to in the regulation as “non-listed businesses);” 4) A person or business that has maintained a transaction account with the credit union for at least 2 months; operates a firm that regularly withdraws more than $10,000 in order to pay its employees in currency; and is incorporated or organized under the laws of the U.S. or state. (Section 1020.315 referred to in the regulation as “payroll customers”). (Page 3-6 to 3-7)

3. The credit union will receive a special order clearly describing the transactions to be reported as well as: 1) dollar amount of transactions subject to the special reporting; 2) types of transactions subject to the special reporting; 3) use of special forms for filing the reports; 4) the address to send the reports to; 5) starting and ending dates for reporting the transactions; 6) name of a Treasury official to contact with questions; and 7) the length of time to retain the information and reports generated. (Pages 3-8 to 3-9)

4. The credit union must maintain a record of: 1) the member’s name; 2) the date of purchase; 3) the type of instrument purchased; 4) the serial number of the instrument; and 5) the dollar amount of the transaction. (Page 3-14)

5. Groups engaged in the following businesses are ineligible for exempt person status: 1) service as a nonbank financial institution or agents of nonbank financial institutions; 2) purchase or sale to customers of motor vehicles of any kind, vessels, aircraft, farm equipment, or mobile homes; 3) the practice of law, accountancy, or medicine; 4) auctioning of goods; 5) chartering or operation of ships, buses, or aircraft; 6) gaming of any kind except licensed parimutuel betting at race tracks; 7) investment advisory or investment banking services; 8) real estate brokerage; 9) pawn brokerage; 10) title insurance and real estate closing; 11) trade union activities; and 12) any other activities that may be specified by FinCEN. (Page 3-7 to 3-8)

6. An annual notification. (Page 3-16)

7. The Bank Secrecy Act plan must include: 1) a system of internal controls to ensure continuing compliance, 2) provide for independent testing for compliance by either credit union personnel or outside parties, 3) designate an individual to coordinate and monitor daily compliance, and 4) provide training for appropriate personnel. (Page 3-4)

8. The credit union must collect: 1) name, 2) date of birth (for an individual), 3) a residential or business street address, 4) identification number (SSN, EIN, ITIN, passport number, etc.) (Page 3-19)

9. True (Page 3-20)

10. Yes. The name must be checked against government lists. (Page 3-21)

11. False. The notice must be placed or given so that members opening accounts through the various methods the credit union offers see the notice prior to opening the account. (Page 3-22)