Transcript Fuller Center for Housing

Fuller Center for Housing
Anti-Money Laundering Training for
Covenant Partners
2013
The risk of people using The Fuller Center for
Housing loans for money laundering is very
small.
However, terrorists have used non-profits to fund their operations.
Non-profits are often exploited by people with criminal intent.
It makes good fiduciary sense to implement sound financial systems to
prevent theft and fraud.
And it is the law.
So we are here to help you earn your
Fuller Center Special AML Agent’s badge.
And don’t give us any of that "Badges?
We don't need no stinkin' badges!"
Press 1 if you would like to continue in English…… Acronyms
• AML-Anti-Money Laundering Program
• BSA-The Bank Secrecy Act authorizes the Secretary of the Department of
The Treasury to issue regulations requiring financial institutions to keep
records and file reports that the Secretary determines “have a high degree
of usefulness in criminal, tax, or regulatory investigations or proceedings
or in the conduct of intelligence or counterintelligence activities, including
analysis, to protect against international terrorism. This act gives the
Secretary the authority to impose anti-money laundering programs (AML)
on financial institutions.
• CTRs Currency Transaction Reports
• RMLO- Residential Mortgage Lenders and Originators
• FinCEN- Financial Crimes Enforcement Network is part of the US
Department of The Treasury
• SAR-Suspicious Activity Report
• SDN-Specifically Designated Nationals and Blocked Person List
A Review of the Regulatory Requirements
Why does our Fuller Center covenant partner have to create an Anti-Money
Laundering Program (AML)?
• The Secretary of the Department of the Treasury has extended the requirement
for AML programs to be established by mortgage originators and finance
companies. The Federal Register/Vol 77, No30/ February 14, 2012 says:
• The term “loan or finance company” is not defined in any FinCEN regulation, and
there is no legislative history on the term. The term, however, can reasonably be
construed and extended to any business entity that makes loans or finances
purchases on behalf of consumers and businesses.
• …FinCen also expects non-profit housing organizations may reasonably be deemed
to be extending a residential mortgage loan (including a short-term mortgage
loan) or offering or negotiating the terms of a residential mortgage loan…
• This applies to all Fuller Center covenant partners who signed the Fuller Center
Covenant Partnership Agreement regardless of size and staffing level.
When was our Fuller Center covenant partner required by law to implement an AML
program?
• The compliance date for 31 CFR 1029.210 was August 13, 2012.
What are the penalties for not being in
compliance?
• This program is part of the PATRIOT Act and the
penalties associated with noncompliance are
severe, including very stiff fines ($25,000 per day)
and significant criminal penalties (imprisonment
up to five years). The Internal Revenue Service
and Consumer Financial Protection Bureau have
the right to audit Fuller Center covenant partners
for compliance.
• We know what you are thinking, “We just want to
build houses……” Amen.
What changes do we have to make in how
we operate?
The basic changes for the covenant partner will be:
(1) appoint an officer or employee to keep trained on the
AML program procedures
(2) verify the identity of the applicants
(3) check the names of the applicants with the
government terrorist watch list
(4) retain applicant documentation for 5 years
(5) receive training as necessary
(6) have a system to have someone other than the
compliance officer perform an audit to make sure the
AML procedures are being followed.
The law requires at a minimum a four pillar
approach to implementing AML policy
1. Development of internal policies, procedures, and controls
In accordance with the Financial Crimes Enforcement Network (FinCEN)’s requirement that all nonbank
mortgage lenders and originators implement an AML program effective compliance date August 13, 2012,
all US Fuller Center covenant partner Boards of Directors are required to adopt a program policy,
procedures and controls document.
2. Designation of a compliance officer who will be responsible for ensuring that
The Fuller Center’s AML Program is implemented effectively, including monitoring compliance by the
company’s agents and brokers with their obligations under the program; The AML Program is updated, as
necessary; and, appropriate persons are educated and properly trained.
3. Offer ongoing Board officer and employee training program
The Fuller Center for Housing’s US Programs Department will provide its covenant partners ongoing
training opportunities at the annual Covenant Partner Conference or through appropriate third party
training services. Training programs will be a review of AML program, updates in the regulation and will
include how to identify “red flags” and signs of money laundering, how to respond when a risk is
identified, record retention requirements and other items as required by BSA.
4. Establish Independent audit function to test for compliance
FinCEN will be developing tools to help consistent compliance examination. They will recommend
reviews to see that covenant partners are making an effort to verify applicant identity, have a record
keeping and file retention policy and understand the procedures for filing a Suspicious Activity Report
(SAR). Someone other than the appointed compliance officer will be required to perform the compliance
examination review and report to the covenant partner Board Treasurer.
What is a Suspicious Activity Report (SAR)?
• Fuller Center covenant partners must report suspicious activities
related to transactions of at least $5,000 or involving funds derived
from or intended to disguise illegal activity. Suspicious activity also
includes businesses in which a partner family, vendor or
subcontractor would not normally be expected to engage.
• For example, if a Fuller Center partner family whose annual income
is $19,450 attempts to repay their mortgage with $30,000 and
cannot adequately explain where the funds came from, this would
represent a Suspicious Activity.
• Trust your instincts; if things don’t seem right…maybe they’re not.
Two easy steps to documenting that
you know your partner families
1) Use Customer Identification Form Before Applications are Officially
Approved
CUSTOMER IDENTIFICATION FORM
(USA Patriot Act Section 326)
Borrower’s Name: ____________________________________________
Residential Street Address:_____________________________________________________
To help the government fight the funding of terrorism and money laundering activities,
Federal law requires us to obtain, verify, and record information that identifies each
person who applies for financial services from The Fuller Center for Housing. We will ask
for your name, address and other information that will allow us to identify you. We may
also ask to see your driver's license or other identifying documents.
For persons without a SSN/TIN, the ID number must be from one of the following: passport, alien ID card, or any other
government issued document issued document evidencing nationality or residence and bearing a photograph or similar
safeguard. At least two forms of identification must be presented and documented. For applications taken in person, at
least one “Primary” form of ID must be used. For all other applications, any combination of Primary and Secondary Ids
may be used. Complete a separate form for each Borrower.
Primary Forms of ID - must display Borrower’s Name Document Country/State of Origin
ID Number___________________________________________
Date of Birth__________________________________________
Expiration____________________________________________
Date________________________________________________
[ ] State Issued Driver License
[ ] State Issued ID Card
[ ] Military ID Card
[ ] Passport
[ ] US Alien Registration Card
[ ] Canadian Driver License
Secondary Forms of ID – must display Borrower’s Name
ID Number___________________________________________
Date of Birth__________________________________________
Expiration____________________________________________
Date________________________________________________
[ ] Social Security Card U.S. Government
[ ] Government Issued Visa
[ ] Birth Certificate
[ ] Non-US/Canadian Driver License
[ ] Most Recent Signed Tax Returns [ ] Fed [ ] State
[ ] Voter Registration Card
[ ] Organizational Membership Card
[ ] Bank/Investment/Loan Statements
[ ] Paycheck stub with name
[ ] Most Recent W-2
[ ] Home/car/renter insurance papers
[ ] Recent utility bill
I certify that I have personally viewed and accurately recorded the information from the
documents identified above, and have reasonably confirmed the identity of the applicant.
Fuller Center Representative Signature: ________________________________________
Date: ______________________
Fuller Center Representative Name: ____________________________________________
2) All applicants should be searched on the Treasury Department’s Specially
Designated Nationals and Blocked Persons List Search
http://sdnsearch.ofac.treas.gov/
Steps to good financial controls
Segregate Duties for Approving Families, Handling Money and Board Oversight
Identify the individual(s) responsible for the following:
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Homeowner applications and customer identification _______________________________________
Person(s) authorized to execute promissory notes, liens, and deeds of trusts _____________________
Individual(s) authorized to make deposits _________________________________________________
Individual(s) responsible for bookkeeping _________________________________________________
Individual(s) authorized to disburse funds _________________________________________________
Individual(s) responsible for reconciling checking and savings accounts __________________________
___________________________________________________________________________________
Other basic fiduciary best practices:
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Are two signatures required on all checks?
Yes / No
Are funds held in trust or escrow comingled with general or personal accounts?
Yes / No
How often are reports provided to the board of directors? ____________________________________
Does the CP have a succession plan for replacing and retraining the designated AML compliance officer? Yes / No
Are required independent AML audits being conducted annual with reports back to the board? Yes / No
The Fiduciary Responsibilities of Every
Fuller Center Board Member
Definition of 'Fiduciary'
A person legally appointed and authorized to
hold assets in trust for another person. The
fiduciary manages the assets for the benefit of
the other person rather than for his or her own
profit.
Required Annual Independent AML Audits
• This is not the same thing as a financial audit as the AML
audit is specifically designed to look for your covenant
partner’s controls to prevent money laundering and to
detect and report suspicious activity.
• The independent auditor can not be the compliance officer.
• A volunteer from the financial services industries such as
accountants, insurance agents, bankers or investment
brokers are all subject to similar regulations and therefore
can be a great help with your audit and with improving
your fiduciary systems.
• The online operations manual provides a sample auditor’s
checklist. It is always helpful to know the questions before
you take a test. The same thing is true for an audit.
Anti-Money Laundering Independent
Audit Review Checklist
Date of Review ____________________________
Review performed by ____________________________________
How often are reports provided to the board of directors? ____________________________________
1
Fuller Center covenant partner’s designated compliance officer _________________________________
Does the board have a succession plan in the event of compliance officer turnover?
Yes / No
Is the designated compliance officer acquainted with the Suspicious Activity Report electronic filing
website for Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs)?1
http://bsaefiling.fincen.treas.gov/main.html
Yes / No
Review of financial operations:
Person(s) responsible for filing a Currency Transaction Report and Suspicious Activity Reports
___________________________________________________________________________________
Is a signed coy of The Fuller Center for Housing - Anti-Money Laundering Policy Statement & Program
Procedures kept on file?
Yes / No
Is the designated compliance officer aware of the requirement to preserve SAR and accompanying
documentation for 5 years?
Yes / No
Date of approval of the policy by covenant partner board of directors __________________________
Describe covenant partner’s risk for money laundering:
Does the covenant partner have segregated duties with regard to handling, recording and reporting of
financial transactions to the board of directors?
Yes / No
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
List individuals responsible for:
Homeowner applications and customer identification ________________________________________
Are customer identification forms found in files for approved applications?
2
Yes / No
How many files were reviewed? _______________________
Are all applicants checked on the Treasury Department’s Specially Designated Nationals
and Blocked Persons List Search? http://sdnsearch.ofac.treas.gov/
Yes / No
Person(s) authorized to execute promissory notes, liens, and deeds of trusts ______________________
Describe covenant partner’s staff training procedures:
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
Assess overall effectiveness of suspicious activity monitory systems used for AML compliance:
Individual(s) responsible for bookkeeping _________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
Are records kept in a locked place?
Have any Suspicious Activity Reports been reported by the covenant partner?
Individual(s) authorized to make deposits _________________________________________________
Yes / No
Yes / No
Individual(s) authorized to disburse funds _________________________________________________
If yes, was the Fuller Center for Housing –Anti-Money Laundering Policy procedures followed? Yes / No
Are two signatures required on all checks?
Yes / No
Are funds held in trust or escrow comingled with general or personal accounts?
Yes / No
If no, attach a violation report and recommended resolutions for compliance officer and board of
directors review.
Individual(s) responsible for reconciling checking and savings accounts __________________________
Evaluate management’s efforts to resolve violations and deficiencies noted in previous audits and
regulatory examinations, including progress in addressing supervisory actions, if applicable:
1
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Independent Review cannot be performed by the covenant partner’s designated compliance officer
2
Required for all customers with loans after August 13, 2012
Fuller Center covenant partners must report suspicious activities related to transactions of at least $5,000 or
involving funds derived from or intended to disguise illegal activity. Suspicious activity also includes businesses in
which a partner family, vendor or subcontractor would not normally be expected to engage.
Are there any new rules for 2013?
• The major change we’ve discovered is that
FinCEN is now no longer accepting paper
Suspicious Activities Reports. If you click on
the link from Appendix I in our original policy
template it now redirects you to their
electronic submission website.
NOTICE
As of April 1, 2013, financial institutions must use the new FinCEN reports, which are available
only electronically through the BSA E-Filing System. FinCEN is no longer accepting legacy
reports. For more information, click here.
Do we need to send any AML reports
to the Americus headquarters?
• No. While we are in covenant with your local
mission, your local board is independently
responsible for compliance with this regulation.
• We do require annual reports and copies of your
990 filings and CPA audits if they are available.
• We may ask for evidence of AML compliance
before accepting your covenant partner into
special programs such as The Derelict to Decent
Matching Loan Fund for financial assistance with
renovating donated foreclosed houses.
Whew! That’s all we are going to
cover today.
• When I asked the US Treasury for guidance on
putting together this training they sent me a
439 page manual. We did this in less than 20
slides. Until we are directed otherwise, this
PowerPoint presentation fulfills your annual
requirement for Anti-Money Laundering
Training.
• Please document and save the date and time
of each person who has received this training.
For additional questions…
• Contact Kirk Lyman-Barner, Director of US Field
Operations for The Fuller Center for Housing at
(229) 924-2900 or [email protected]
Thank you for all that you do
in your communities to help
make the world a better place
one house at a time!