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Automated Clearing House (ACH) is an electric network for financial transactions in the United States. ACH processes large volumes of credit and debit transactions in batches. ACH credit transfers include direct deposit, payroll, direct deposits, tax refunds, vendor payments, and many more payment services. Other examples would be online bill pay and mobile transfers. Essentially, […]
Anti-money laundering (AML) transaction monitoring is a software for banks or other financial institutions (FI). This software allows FIs to monitor their customers transactions on a daily basis in order to monitor risk. Using the information generated from the software, along with the customers’ historical information and account profile, the FI is able to create […]
The Wolfsberg Group is an association of thirteen major financial institutions who have come together to share collective knowledge and produce guidance for financial institutions in areas of major concern, e.g., Trade Finance, Correspondent Banking, Beneficial Ownership, etc. In addition to guidance, the Group also developed an AML Questionnaire which financial institutions may complete and […]
An Offshore Financial Centre is a jurisdiction that permits the creation and operation of a financial institution which may not deal in the host country currency or transaction with the citizens of the host country. That is often referred to as a “Class B License.” Such jurisdictions also permit the creation and operation of Shell […]
The definition of structuring encompasses transactions that attempt to evade the Currency Transaction Reporting (“CTR”) requirement of deposits or withdrawals of cash/cash instruments over $10,000. This may occur as a single transaction approaching $10k or several smaller transactions in different locations of the same institution on the same day or within a short period of […]
As the Bank Secrecy Act evolved, requiring banks to file Currency Transaction Reports on cash and cash items in or out greater than $10,000, the criminal element was quick to develop an alternative approach to getting money into the financial system, covering the Placement phase of Money Laundering. Keeping in mind that the original crime […]
An adjunct to Money Laundering, Terrorist Financing (or Financing of Terrorism) is the process of providing funds to persons who execute an act that disrupts the normal flow of daily living through destruction of populated and popular areas in order to create an atmosphere of fear in the citizenry. The financing of terrorist acts generally […]
Customer Due Diligence (FinCEN CDD Rule) became effective on May 11, 2018. It has four core requirements. It requires covered financial institutions to establish and maintain written policies and procedures that are reasonably designed to (1) on a risk basis, maintain and update customer information; (2) identify and verify the identity of customers and identify […]
As noted in the Federal Financial Institutions Examination Council (“FFIEC”) Bank Secrecy Act / Anti-Money Laundering Examination Manual, customers that pose higher money laundering or terrorist financing risks present increased exposure to banks; therefore, due diligence policies, procedures, and processes should be enhanced as a result. Enhanced due diligence (EDD) for higher-risk customers is especially […]
As defined in the Federal Reserve SR 11-07 and the Office of the Comptroller of the Currency Bulletin 2011-12, “Supervisory Guidance on Model Risk Management,” Section V: “Model validation is the set of processes and activities intended to verify that models are performing as expected, in line with their design objectives and business uses. Effective […]
