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ABA BANKING LAW COMMITTEE Trust and Investment Services Subcommittee: Anti-Money Laundering Developments in the Trust Area. Janis Penton Jonathan A. Wright Union Bank of California San Francisco August 11, 20007. AGENDA. BSA/AML Refresher Special Considerations for the Trust Department
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Janis PentonJonathan A. WrightUnion Bank of California
San Francisco August 11, 20007
Special Considerations for the Trust Department
Special Considerations for Affiliated Broker/Dealers and Investment Advisors
Q & A Session
For Customers and Their Financial Institutions
Example: While Mexico has improved its AML controls, it still should be considered a high money laundering risk because it is a drug producing, drug trafficking and drug money laundering country, with significant official corruption.
Two Sources of Authority for Enforcement of the BSA:
Published July 20, 2007
Attempts to bring uniformity to enforcement of BSA/AML
BSA states that if banks fail to establish or maintain a BSA program or fails to correct previously identified problem, a Cease and Desist Order will be issued
Statement describes circumstances under which the agencies will issue a C & D; as well as other informal or formal enforcement actions
Must be aware of OCC Risk priorities
Must Coordinate BSA Program with other business units of the Bank and Broker/Dealer
Should consider linking trust systems to OFAC and other database screens/searches
Make sure Trust staff is aware of special Red Flags for trust money laundering
From the OCC BSA/AML Examination manual.
Clients of Personal Trust
a. Trust clients who have opened a new account after October 1, 2003
b. Charitable trusts and Foundations
c. Accounts/ relationships with cash intensive businesses
d. Agency and Custody Accounts (whether managed or directed)
e. Non-Resident Alien Trust Account owners
f. Trust accounts/ relationships presenting negative factors on an internet search
g. Trust accounts/ relationships identified with SFPFs
h. Trust clients with Non-Residence Alien Status
i. Trust accounts with missing Tax Identification Numbers
j. Trust accounts or clients with foreign addresses
Trust Red Flags
Must be aware of SEC and OCC examination guidelines, including need to file SARS for brokerage as well as banking activity
Must Coordinate BSA Program with other business units of the Bank including Trust and Wealth Management- consider Reliance Agreements for EDD
Should consider linking brokerage systems to OFAC and other database screens/searches as well as to Bank alert systems
Make sure B/D and RIA staff is trained on BSA/AML and Bank policies so they can assist in detecting suspicious activity
Acting as agent for non-client fiduciaries
Obtaining information on remote beneficiaries
Practical issues with Reliance Agreements