• September 2014: A Waterbury man convicted of participating in a drug‐
trafficking ring has testified that a Seymour lawyer was laundering money. Bruce Yazdzik said in U.S. District Court in New Haven Tuesday that Ralph Crozier knew Yazdzik’s money came from drug sales and that he helped Yazdzik establish
businesses and make investments to make the money seem legitimate.
• September 2014: Several managers and employees of two Providence, Rhode Island, stores convicted of food stamp fraud and money laundering and
sentenced to prison terms.
• August 2014: John Rice of Windsor, CT sentenced to 18 months in prison. On April 25, 2014, Rice pleaded guilty to one count of criminal copyright
infringement and one count of money laundering. Rice also structured cash deposits into his bank account. In November 2012, Rice withdrew from his account $39,237 in cash derived from his criminal activity (selling bootlegged merchandise) in order to purchase a cashier’s check payable to BMW of West Springfield.
Other Helpful Hints – Note Local News
• July 2014: Bangor, Maine: Mei Ya Zhang, of Waterville, was sentenced to 15 months in prison, three years of supervised release and ordered to pay more than
$88,000 in restitution to the IRS. Zhang was the manager of a Chinese buffet restaurant that brought undocumented aliens into Maine to work. Among other actions, Zhang paid the undocumented aliens under the table with cash generated illegally by their employment. Zhang filed numerous false quarterly employment tax returns in which the undocumented aliens were not disclosed and employment taxes were not properly withheld or paid.
Other Helpful Hints
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KYC for high wealth customers–
It goes without saying that high net worth customers could be targets of wrongdoing more often than others. Although this may be more fraud‐related than AML‐related, know thattrusts and other wealth‐type accounts are easy pickings for fraud. Trustees have authority to move money and if the instructions to the trustee are spoofed, an unwitting trustee could erroneously wire money out of the country to a
fraudster.
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From a risk perspective, be sure you are reviewing Trusts and other fiduciary accounts regularly. Yes, they tend to have low activity, but that activity still needs to be reviewed.Other Helpful Hints
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KYC for high wealth customers–
Be aware of the risks associated with trusts and estates – they can be used to mask beneficial ownership.–
Be aware of “referral sources”, and patterns of activity in all of the accounts referred to a bank by one referral source.•For banks that have Private Banking or “Relationship Banking for High Net Worth Customers,” consider adding the review of referral sources’ entire fiefdom (in aggregate) to your
monitoring program.
Other Helpful Hints
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KYC for high wealth customers–
Be sure you document extra training for the BSA staff on Trusts, Estates, and other fiduciary accounts.–
Be sure your BSA risk assessment touches on the risks associated with high wealth customers.–
Be sure to run ‘negative news’ on referral sources, even if they’re not customers.Other Helpful Hints
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BSA in Lending–
I’m aware of exams where the BSA Officer has actually been asked for all BSA‐related suspicious activity referrals from the lending departments, all lending‐related cases, and alllending‐related SARs.
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Might not be the best situation if your answer is “There haven’t been any.” Even in the smallest of banks, there issurely something that’s been suspicious in the lending world.
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If you file a lot of SARs, you don’t want to be going through each one looking for the lending‐related ones. Consider having some way to flag them as such.Other Helpful Hints
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Marijuana–
Other than the issue of marijuana companies being illegal from a Federal perspective (which is a big concern), we have an issue similar of banking an extremely risky entity, much like an MSB. (Do we really understand the full extent of the risk, yet, though?)–
If you can become a bank that has this as a specialty, and you bank a lot of them so that you develop expertise, thenconsider putting your risk program together much the same way you put it together for MSBs.
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Obtain all the information on the entire industry that you possibly can. Get to know who in your state (or region) serves as a SME or think‐tank for this.Other Helpful Hints
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Marijuana–
Let’s assume you choose to not willingly bank marijuana companies… how do you ensure one of your existingcustomers isn’t becoming a dispensary?
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There are lists that indicate who has applied for a license.–
Many entities are names something like “holistic health”, etc.If you have customers that are likely to be interested in dispensing marijuana, you’ll want to watch the lists.
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You’ll need P&P to show that you’re are monitoring this risk.Other Helpful Hints
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Marijuana–
Update the following documents before making the final decision to bank marijuana companies:•BSA Risk Assessment
•BSA written Policy and Program
•Staffing Assessment
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Do this to show what your BSA department will look andfunction like if you do bank marijuana companies. Then use the documents in the decision‐making process. If executive management decides not to move forward, just archive the documents.