2010 FiSCA Convention

1. 2010 FiSCA Convention October 2, 2010

2. Best Practices for Developing and Maintaining Bank Relations Terry Keenan, Senior Vice President and Kathy Dotto, First Vice President

3. Introduction • Financial requirements for opening a new account • BSA/AML requirements for opening a new account • Requirements for maintaining an existing account • Enhanced due diligence and reporting suspicious activity • Helpful hints • Questions

4. Account Requirements

5. Initial Account Opening • Submit the following personal data documents for each principal owner: • Personal financial statement, including liquid asset verifications (bank statements, brokerage statements, stock certificates, etc.) • 3 years personal tax returns • Signed IRS Form #4506-T • Credit bureau report • Background check • Bio/Resume • Contact list of 3 personal/professional references

6. Initial Account Opening • Submit the following store documents: • 2 years complete annual reports submitted to State DFPR or applicable governing body • Most current interim financial statement • Articles of incorporation or operating agreement • Good standing certificate • Third party verifications • Copy of purchase contract (if applicable) • Copy of new store application submitted to DFPR or governing body (if applicable)

7. Initial Account Opening • Submit the following store contracts and information: • Lease or title policy for building • Surety bond • Blanket bond • Money transfer contract • Armored car contract • Contact information for accountant, attorney, and current bank • Completion of Customer Identification Program (CIP) verification form

8. Initial Account Opening • Submit the following store account documents: • Account bank statements for past 3 months • Account analysis statements for past 12 months • Cash order reports for past 3 months • Cash order projections for 1 year with assumptions • Most recent money order float report • Large and commercial check logs for most recent full month

9. Initial Account Opening – BSA/AML • Submit the following documents: • Regulatory compliance manual • Written operating procedures • Identification in accordance with Customer Identification Program (CIP) (Name, Address, DOB, SSN, 2 forms of ID) • FinCEN MSB registration confirmation • License confirmation from State DFPR or applicable governing body

10. Initial Account Opening – BSA/AML • Adequate BSA/AML Compliance Program including: • Internal controls • Designated compliance officer • Independent testing (cannot be same person as compliance officer) • Training • Confirmation of money transfer agent status (Western Union / Moneygram) • On-site visit for new stores or as necessary for existing stores

11. Annual and Ongoing Review • Annual report ending 12/31 • Quarterly interim financial statements • Current personal financial statement for each owner • Income tax return verification form 4506-T for each owner • License renewal certificate • FinCEN MSB registration confirmation • Evidence of valid surety bond insurance coverage • Examination reports • Internal Revenue Service Title 31 exam • DFPR annual exam • Periodic submission of money order float reports, daily balance sheets, etc.

12. Account Opening And Closing • An account cannot be opened if the owner does not provide all required documentation, including an adequate compliance program. • If the compliance program is not adequate, the BSA/AML Department calls to discuss, and the MSB is required to complete a compliance program questionnaire • All owners and entities are run through the OFAC list. • The Bank has recently started asking for Title 31 audit results. • The relationship may be terminated if it poses too much BSA risk.

13. Enhanced Due Diligence and Monitoring

14. Enhanced Due Diligence • Most Important Key – Know MSB Customers • Assess the risk of the MSB: • How long has the MSB been in business? • Is the MSB an agent of a well known MSB? • Have SARs been filed on the MSB or their customers? • Have any subpoenas been received related to the MSB? • Does the MSB have a good compliance program?

15. Monitoring the MSB • Customer Due Diligence • Review cash • Review wires • Review money orders • Review large checks deposited • Enhanced Due Diligence • Conduct analysis of all services provided • Conduct detailed on-site visit

16. Additional Collateral • The following trends and factors may indicate increased risk and/or exposure to the Bank: • Declining revenue, profit, or cash flow • Increasing check losses • Increasing debt or decreasing cash position • Increasing account overdraft trends in amount of frequency • Recent management changes

17. Additional Collateral • When these changes are observed: • The internal relationship risk rating is updated to reflect the changes. • Daily and monthly monitoring are increased to ensure further deterioration is quickly determined and appropriately addressed. • Additional collateral is required. • CD account • Stock/brokerage account • Mortgage lien on real estate property

18. Reporting Suspicious Activity

19. Reporting Suspicious Activity • Bank has knowledge so they are required to file SARs on transactions conducted by MSB’s customers • Reminder – first paragraph should tell good information about why filing SAR • Keep CONFIDENTIAL – never discuss with customer

20. Helpful Hints

21. Helpful Hints • Listen to your bank if they are calling you about your customers’ activity • Correct your IRS exam findings • Comply with the examiners • Focus more attention on monitoring and reporting suspicious activity • Ensure CTRs are filed timely and using the correct form • Verify FinCEN registration is filed before expiration and using the correct form • Verify your compliance program contains correct information • Maintain detailed customer files • Enhance due diligence on your customers to identify potential risks of losses • Absentee ownership does not work

22. Questions?