Presentation of October 10, 2014 during the Financial Service Centers of America (FiSCA) Annual Conference's BSA/AML Certification Course. Covering Culture of Compliance, Understanding your market, and Knowing your customers.

1. Instilling a Culture of Compliance
and
Knowing Your Customers
1

2. Objectives
2
Enhance risk management practices
to better mitigate risks
Protect business and make it more
profitable
Protect and serve your community –
be a good citizen

3. Suspicious Activity
▪ Prevent
▪ Detect
▪ Report
▪ Assist
3

4. Culture of Compliance
Signs of a lax, Non-Compliance Culture?
FinCEN’s Culture guidance – FIN-2014-A007
Advisory to U.S. Financial Institutions on Promoting a
Culture of Compliance
Engaged Leadership
Compliance not compromised by revenue interests
Appropriate internal information sharing
Adequate Human and Technological Resources
Effective Program- Independent, Competent Testing
Understand importance, utility of reporting
4

5. Sea Change
“As Director, I feel it is important that financial institutions take responsibility when their actions
violate the BSA. And by accepting responsibility, it is not just about admitting to the facts alleged in
FinCEN’s enforcement action. It is also about admitting a violation of the law. Over the last year,
we have changed our practice at FinCEN to one in which our presumption is that a settlement of an
enforcement action will include an admission to the facts, as well as the violation of law. And, we have
begun implementing this practice in our enforcement actions against all sizes and types of financial
institutions.
Integrity and transparency goes a long way. It is a great bestowal of trust that enables financial
institutions to be part of the U.S. financial system, to be part of the global financial system. And that
trust -- that privilege -- comes with obligations. One of those obligations is a responsibility to put
effective AML controls in place so criminals and terrorists are not able to operate with impunity in the
U.S. financial system.
As FinCEN’s recent enforcement actions show, FinCEN will act under such circumstances to protect
the integrity and transparency of the U.S. financial system.”
Jennifer Shasky Calvery, Director, FinCEN
FIBA, Anti-Money Laundering Conference
February 20, 2014
5

6. Hard Target OR Soft Pushover
Do not compromise yourself
 with exceptions
 poor documentation
 lack of focus or willpower
 Will you be a wet noodle? Man or Mouse?
 Official government ID - real, current
 not expired
 not international driver’s licenses
 not “for novelty purpose only” ID cards
6

7. Customer Identification Program
Establishing a reasonable basis to believe person is who
he/she claims to be
Mickey Mouse? Elvis Presley? (I think not….)
7

8. What does KYC look like?
 Before you can Know Your Customer, you need to
know your market.
How do I recognize a customer when I see
him/her?
How do I distinguish a person coming in to buy
something that I don’t want to be a “customer”?
8

9. Solid
Understanding
of Market
9

10. What is normal & expected?
Socio - Economic profile
occupation
education
income
ethnicity
dress
speech patterns
10

11. Socio-pathic profile
 prevalent problems and issues in our neighborhood
 familiarity with types of people who may be
perpetrating crimes in our neighborhood
 familiarity with types of victims locally
 Who is being taken advantage of in our
community?
11
What is normal & expected?

12. Good Customer Interface
12

13. STOP!
Don’t be distracted
Make eye contact
Pay attention
Be alert
13

14. Look!
Be observant
Really look (not just see)
Observe demeanor
Detect signs of deception
14

15. Listen
Clear questions and
answers
non-threatening
casual alertness
15

16. Who is this person?
Be friendly- you want customers to come back
Details- employment, occupation, title, where
other identifiers
does person actually live/work nearby?
family, friends, business associates, related
customers
What might that tell us?
16

17. What services?
Used, inquired about
Cross selling is good business practice
helps understand customer too
may also help identify red flags
Does person meet profile of what is expected for
market?
Does timing, frequency of transactions make sense?
17

18. Levels of Knowing
• New customer – simple remittance
• Repeat remittance customer
• Detailed information gathered from multiple
tranx types
• No interaction
• Moderate interaction
• Closely held, limited openness
• Too open
18

19. Training - Ongoing
Training –
not just once a year
can’t set it and forget it
do risk based refreshers
throughout year
19

20. Role Playing
Isn’t role playing just another way of…
inspect what you expect?
Allows you to demonstrate how to handle real life scenarios
effectively
Mystery shopping can help prove whether training is
effective or not
20

21. 21

22. 22

23. 23

24. 24

25. 25

26. Jay Postma, CAMS
President
MSB Compliance Inc.
Jay.Postma@MSBComplianceInc.com
26
www.MSBComplianceInc.com
www.Twitter.com/MSBCompliance
Weekly newsletter:
www.paper.MSBComplianceInc.com