Compliance Question of the Week
January 22, 2013
January 22, 2013
Are we required to implement policies and procedures specifically relating to safe deposit boxes and Bank Secrecy Act (BSA) monitoring? We have heard rumors that the NCUA is asking credit unions to produce and monitor reports that monitor safe deposit box activity.
Yes and no. Appendix F of the Federal Financial Institutions Examination Council (FFIEC) BSA Manual does indicate that certain patterns of behavior or activity directly related to a safe deposit box can be considered suspicious.
Appendix F – Other Suspicious Activity:
- Customer visits a safe deposit box or uses a safe custody account on an unusually frequent basis.
- Safe deposit boxes or safe custody accounts opened by individuals who do not reside or work in the institution’s service area, despite the availability of such services at an institution closer to them.
- Customer exhibits unusual traffic patterns in the safe deposit box area or unusual use of safe custody accounts. For example, several individuals arrive together, enter frequently, or carry bags or other containers that could conceal large amounts of currency, monetary instruments, or small valuable items.
- Customer rents multiple safe deposit boxes to store large amounts of currency, monetary instruments, or high-value assets awaiting conversion to currency, for placement into the banking system. Similarly, a customer establishes multiple safe custody accounts to park large amounts of securities awaiting sale and conversion into currency, monetary instruments, outgoing funds transfers, or a combination thereof, for placement into the banking system.
Most credit unions will not have a way to produce a report that shows the frequency of access by each member to a safe deposit box. However, credit union staff generally knows their members and can determine if a member is changing his or her routine, if the routine is suspicious to begin with, and if the situation should be monitored.
While it may not be feasible to create a report that documents safe deposit box activity, credit union staff should be trained around the red flags found in Appendix F of the BSA Manual. The red flags listed provide a great training tool and could be incorporated into procedures that discuss identifiable suspicious activity.
Most importantly, credit union staff should be able to identify suspicious behavior and know when, how and to whom it should be reported. Branch staff is usually the best resource when it comes to identifying suspicious activity. Their training should be targeted to the situations they would most likely encounter, such as over-the-counter transactions, safe deposit boxes and account opening.
Questions? Contact the Compliance Hotline: 1.800.546.4465, firstname.lastname@example.org.
Posted in Compliance.