Pub. 6 2015 Issue 2

summer 2015 21 West Virginia Banker expected to obtain beneficial ownership information on all entity accounts and many banks already do so. BSA/AML Compliance Program Structures To clarify BSA/AML Compliance Program Structures, the FFIEC added a caution on restricted transparency across the organization and the need to ensure AML controls are appropri- ate under the circumstances. This appears to be consistent with FIN-2010-G001, 2010, “Guidance on Obtaining and Retaining Beneficial Ownership Information, which called for implement- ing CDD/EDD procedures on an enterprise-wide basis and AML staff “crosschecking” information with other departments. Prepaid Access This section covering prepaid access and payroll cards underwent major changes. Of particular interest, banks now need to review the prepaid access third party service providers’ BSA compliance programs as well as their BSA monitoring capabilities. Also, banks need to obtain transaction activity from the providers and review transactions for potentially suspicious activity. In accordance with the manual’s guidance on Nonbank Financial Institutions, providers and sellers of prepaid access are now con- sidered Money Services Businesses (MSBs), subject to specified thresholds/exclusions such as the type of prepaid card (open vs. closed loop), amount (maximum value per device per day), poten- tial usage (domestic vs. international) and method of reloading (depository vs. non-depository source). Nonbank Financial Institutions In addition to defining providers and sellers of prepaid access as MSBs, the manual also considers administrators and exchangers of virtual currency to be MSBs (specifically, a money transmitter) and thus banks are expected to apply appropriate BSA monitor- ing procedures similar to those for money transmitters. Virtual currency administrators, such as Bitcoin, are now considered MSBs and their accounts should be monitored accordingly. Third-Party Payment Processors The manual added various risk mitigation measures for third-par- ty payment processors, most notably that banks should “audit” their third party payment processing relationships. Such audits should encompass checking that the processor is fulfilling its contractual obligations and verifying the legitimacy of its mer- chant clients. This reflects increased recognition that Third-Party Payment Processors are generally considered high risk. In addition to the aforementioned changes, the manual also addresses Foreign Correspondents, Bulk Shipments of Curren- cy, ACH Transactions among others. Therefore, management should evaluate the key changes in the updated manual to ensure their bank’s compliance. The 2014 FFIEC BSA/AML Compliance Examination Manual can be located at the following website: https://goo.gl/HJgEft. n Joseph Hager, CPA, CGMA is a Senior Manager with Arnett Carbis Toothman LLP with over nine years of financial institution experience. Mr. Hager can be contacted at 800-642-3601 or through email: joseph. hager@actcpas.com Scott N. Drake, CPA sdrake@sek.com Scot E. Orndorff, CPA sorndorff@sek.com Luke C. Martin, CPA lcmartin@sek.com Gary D. Snyder, CPA gsnyder@sek.com DoriAnn F. Hoffman, CPA dhoffman@sek.com 717.263.3910 888.272.7351 SEK.com Get a new perspective on your success. Our experience adds value beyond the numbers. Partner with an advisor you can trust.