Pub. 4 2014-2015 Issue 1

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S July • August 2014 15  Thrid-Party  continued on page 16 Minimize your risk with CHFA’s Cash Collateral Support program. Banks that use the CCS program will receive cash deposits as collateral for a business loan when the business cannot meet the collateral requirements. Close the deal with more customers. Contact CHFA Community Development today. look out for your small business clients 800.877. chfa (2432) www.chfainfo.com financing the places where people live and work documentation should clearly provide full details of the potential customer’s business activities, financial position, products and services offered, and background investigations of business principals. In addition, prior to accepting the new customer, consider reviewing its client base to evaluate for higher-risk business types. Finally, testing of TPSP CDD should be conducted regularly. In addition to testing conducted annually by an independent party, if AML risk levels associated with the TPSP are considered moderate or high, your institution also should conduct testing on a sample basis of CDD performed for new customers on an ongoing basis to validate that the TPSP is compliant with your institution’s programs in this area. Enhanced Due Diligence and SAR Filing Similar to CDD programs, your TPSP should have written policies and procedures regarding how accounts considered at higher risk for money laundering, terrorist financing, or other illegal activities are monitored for suspicious activity, otherwise known as enhanced due diligence (EDD). It’s very important that the TPSP has developed an effective means for identifying suspicious patterns of activity within its customer base—pref - erably an automated solution that evaluates activity based on preselected criteria similar to your institution’s AML-monitoring software tool. Critical to this function is the need for a well-documented process that has been approved by your institution for periodic evaluation of accounts designated high risk for suspicious activ- ity. Monitoring activities should be in written formand reviewed periodically by your institution’s BSA officer to ensure compli - ance with procedures. Another important consideration is how suspected suspi- cious activity will be evaluated for reporting to FinCEN (in a Suspicious Activity Report, or SAR). Ongoing responsibility for evaluation of suspicious activity should be clearly documented in written form between your institution and the TPSP. In certain cases the TPSP may be the most appropriate party to report suspicious activity—for instance, if the TPSP is registered as a money service business or is subject to reporting rules as a mortgage broker or originator. However, your institution should be in full agreement regarding the process to be deployed and should fully participate in decisions regarding whether activity is deemed suspicious or a decision not to file a SAR is made. For TPSPs considered moderate to high risk, it may even be necessary to assign bank employees to conduct ongoing and periodic on-sitemonitoring of the TPSP’s CDD programand sus- picious activity monitoring and SAR processes to ensure proper