Bank Secrecy Act (BSA) Regulations - Unusual Activities

Gregory J. Cook, EA, CPA+ Accredited Tax Advisor Past President Alabama Society of Enrolled Agents Past President Alabama Association of Accountants

Notice any unusual characteristics, such as:

*An individual customer purchases products/services on a regular basis but seems neither to reside nor work in the MSB’s service area.

*A customer pays for MSB products/services using musty bills that have an unusual or chemical-like odor.

*A customer pays for MSB products/services using money orders or traveler’s checks without relevant entries on the face of the instrument. (e.g., for money orders – no payee, and for traveler’s checks – no signature or countersignature).

*A customer pays for MSB products/services using money orders or traveler’s checks with unusual symbols, stamps or written annotations (such as initials) that appear either on the face or on the back of the instruments.

*A customer purchases money transfers, money orders, traveler’s checks, etc., with large amounts of cash when the MSB does not require payment in cash.

*An individual or business customer asks to purchase traveler’s checks or money orders in large bulk orders.

*A customer purchases a number of money transfers, money orders, or traveler’s checks for large amounts or just under a specified threshold without apparent reason.

*A customer starts frequently exchanging small bills for large bills, or vise versa, when the customer does not normally use cash as a means of payment.

*A customer sends and receives money transfers in equal amounts at or about the same time.

*A customer receives a number of small money transfers and the same day, or within several days, initiates one or more send money transfers to a person in another city or country in about the same amount.

*A customer sends or receives frequent or large volumes of money transfers to or from persons located in foreign countries, especially countries listed as non-cooperative jurisdictions.

*A customer receives money transfers and immediately purchases monetary instruments prepared for payment to a third party.

Changes in Transactions or Patterns of Transactions

Be alert for changes in activity, such as:

*Major changes in customer behavior, for example:
-An individual money order customer begins to make weekly purchases of money orders in the same amounts (when previously he or she only purchased money orders on pay day for rent, utilities, etc.).
-An individual customer begins to bring in large amounts of cash (when previously he or she cashed his or her paycheck to purchase instruments or transfers).

*Sudden and inconsistent changes in money transfer send or receive transactions.

*Rapid increase in size and frequency of cash used by a particular customer.

Employees

Watch out for employee behavior, such as:

*An MSB employee whose lifestyle cannot be supported by his/her salary, which may indicate receipt of tips or bribes.

*An employee who is reluctant to take a vacation, which may indicate he/she has agreed, or is being forced, to provide services to one or more customers in violation of law or company policy.

*An employee who is associated with unusually large numbers of transactions in unusually large amounts, which may indicate he/she has agreed, or is being forced, to provide services to one or more customers in violation of law or company policy.

Situations like those described in this section often will be found, upon further examination, to be completely legitimate. By the same token, other situations not mentioned here might be suspicious if they are inconsistent with the normal activity of a particular customer or employee. As an MSB or MSB employee, you must make a reasonable judgment.