BSA Trends: Student Mules

BSA Training and Banking Regulations Compliance Consulting deb11 - BSA Trends: Student Mules

If you are involved with BSA/AML compliance, you know that it will keep you on your toes!  Bad guys are always looking for new ways to get around the rules! 

One newer development that is increasing dramatically is young people acting as “money mules”.  Fraudsters/money launderers will often target college students as they are finishing college and potentially heading abroad.  They get students to sell their bank account details, such as their login information, for as little as $100-$200.  The fraudsters then take over these accounts and use them to launder money.  Gaining access to an established account helps the fraudster avoid customer identification and customer due diligence procedures, which would come into play if they tried to open a new account.  Sometimes, the fraudsters will even convince the students to cooperate with them.  For example, the fraudster may deposit or wire a sum of money into the account and have the student transfer all but $200 to another account.  The student gets to keep the $200 for their trouble.  You can see where this might be an attractive money maker for a poor college student!

So, what should you do?

You need to be aware of your student accounts and what is considered “normal” activity for them.  How do you know what’s “normal”?  You refer to the customer due diligence questions you asked them at account opening.  You did do that, right?!  Sudden changes in transaction volumes, compared to what was normal, could indicate trouble.  Increased education for your student customers about the effects of fraud is another approach you could take to combat this.

Unfortunately, student mules aren’t the only new trend in BSA/AML compliance.  There are also noted increases in debit/credit card data breaches and fueling scams at gas stations.  Check out the March edition of our Banking on BCC Magazine for more.

Learn about Bankers Compliance Consulting BSA Training opportunities.

Deb Irving

Automated Anti-Money Laundering Monitoring and Artificial Intelligence

A Joint Statement on Innovative Efforts to Combat Money Laundering and Terrorist Financing, was issued on December 3, 2018, to “encourage banks to consider, evaluate, and where appropriate, responsibly BSA Training and Banking Regulations Compliance Consulting deb11 - Automated Anti-Money Laundering Monitoring and Artificial Intelligenceimplement innovative approaches to meet their Bank Secrecy Act/Anti-Money Launder (BSA/AML) compliance obligations…”  The Agencies feel that the effectiveness and efficiency of BSA/AML compliance programs can be enhanced by adopting new technologies, such as artificial intelligence.


Banks must continue to meet BSA/AML compliance obligations with their existing programs while developing other innovative approaches.  Management should evaluate whether and when the innovative approaches are sufficiently developed to replace or augment the existing process(es).  The Agencies also encourage banks that are considering new technologies to contact their respective regulators to discuss the pilot programs and innovative approaches they are considering, to discuss expectations regarding compliance and risk management, and to clarify supervisory expectations.


Be sure to check out the January edition of our Banking on BCC Magazine for more on this.


Deb Irving

Regulation D Account Limitations

And it’s one, two, three strikes you’re out at the old ball game … or is it?  You are probably already aware that Regulation D limits savings and money market accounts to six preauthorized withdrawals or transfers BSA Training and Banking Regulations Compliance Consulting jerod11 - Regulation D Account Limitationsper month or statement cycle of at least four weeks.  You do have choices; however, when it comes to compliance.  Option one is to implement controls that prevent an account from exceeding the withdrawal/transfer thresholds.  Option two is to monitor applicable accounts to see if they exceed the withdrawal/transfer threshold and then follow up with the customer.  Option two and the customer follow up portion is what we’re going to take a swing at today.


Withdrawal/Transfer Thresholds – Exceeded Three Consecutive Months:


Accounts exceeding the transfer limitations for three consecutive months should be converted to a transactions account.  The guidance states, if the depositor exceeded the transfer limit for a third consecutive month, the institution would send a letter informing the customer that the account has been converted to a transaction account. [February 15, 1990 Federal Reserve Board Staff Opinion]


In this scenario, the guidance suggests it’s three strikes and you’re out.


Withdrawal/Transfer Thresholds – More than Three Months/12 Month Period:


…an institution may continue to consider an account an MMDA even there are excess transfers so long as those excess transfers are not the result of an attempt to evade the transfer limits, and if the excess transfers occur in not more than three months during any 12-month period.  This working rule is not absolute; however, and the facts and circumstances must be considered in each case.  [February 15, 1990 Federal Reserve Board Staff Opinion]


In this scenario the guidance suggests it’s four strikes and you’re out.


Withdrawal/Transfer Thresholds – Deliberate Excess/Single Month:


When a customer ignores the transfer limits applicable to an MMDA, the depository institution should take steps to close the account more quickly than it would an account from which the depositor inadvertently, and occasionally, exceeds the transfer limits by a single transfer.  [February 15, 1990 Federal Reserve Board Staff Opinion]


In this scenario the guidance suggests it’s a single strike and you’re out.


These rules are not complicated; however, we find that they are sometimes forgotten and sometimes just plain ignored.  Has it been awhile since you reviewed your Regulation D savings and money market account withdrawal/transfer controls and/or monitoring procedures?  If so, it’s a good idea to do so.


Jerod Moyer

BSA Training

Doing annual BSA/AML training for your team members can often feel like you’re in the movie Groundhog Day.  They’re probably thinking, “haven’t we done this before”?  The key is to keep things fresh and interesting but it can be hard to create buy-in.  You also have the task of training not only your front-line personnel but your Board as well.  What these two groups need to be trained on is vastly different.  Your front-line people need to know when to do things, how to do things, etc.  The nuts and bolts.  Your Board, on the other hand, needs a general understanding of the requirements but they don’t need all the specific details.  They need a 10,000 foot-view.  Finding time to train both groups can also be a challenge.  We’d love to be your solution!

Bank Compliance Consulting

Join us on December 6, 2018, for our BSA/AML Annual Overview webinar which is geared towards your front-line and what they need to know.  We are also offering a BSA/AML Annual Management & Board webinar on December 13, 2018, which will focus only on what your Board needs to know.  The best part?   The comprehensive plain English training manual and free recording!  You can listen to the recording all at once or in small chunks over the course of several months.  It’s up to you!


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Refinances and the 90-Day “Renewal” Exception

We’ve been getting a lot of questions about whether a “Refinance” falls under the broad definition of “Renewals” under the Beneficial Owner Rule.BSA Training and Banking Regulations Compliance Consulting deb11 - Refinances and the 90-Day “Renewal” Exception


After several discussions with representatives at FinCEN, we have a clarification for you!


According to FinCEN, a refinance is a transaction in which an existing obligation is satisfied and replaced by a new obligation.  Whether or not the loan number changes or remains the same doesn’t matter.  The question is simply will there be a NEW obligation?  If the answer is “yes”, then there is a NEW contract and the transaction will NOT fall under the broad definition of a Renewal.


Why is this important?  First, the relief provided by FAQ #12 in the April 3, 2018 Guidance that allows the customer and bank to enter an agreement whereby the customer will notify the bank of any change in beneficial owner information, rather than obtaining a new certification at “renewal”, will NOT apply to Refinances or any other new obligation.


Second, the May 16, 2018 90-day limited exceptive relief from the beneficial owner rules for “renewals and rollovers” will NOT apply to Refinances.


Maybe this wasn’t the answer you were hoping for, but at least it’s clarification that you can now train on and implement!


Remain Calm and Carry On!


Deb Irving