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Banks have also been cited for recordkeeping violations. Foremost has been the failure to properly record a statement of purpose on loans in excess of $5.000 not secured by an interest in real property. The majority of the BSA violations appear to result from the weaknesses in banks' internal controls and policies. However, through the efforts of all parties, enhanced compliance efforts within banks are being noted. OCC submits all violations noted in examination reports to the Department of the Treasury on a quarterly basis. Where special attention is warranted, OCC makes a separate referral of the matter. More than 75 such referrals were made in 1985. These referrals had been made directly to Treasury's Office of the Assistant Secretary for Enforcement. In light of the recent delegation from the Secretary to the IRS, and in line with the suggestion of the new IRS/Financial Institutions Regulatory Working Group that was created in December of 1985, these separate referrals for consideration of criminal or civil penalties are now being sent directly to the IRS, Criminal Investigation Division (CID), with a copy provided to the Assistant Secretary for Enforcement. Once referrals have been made, our examiners and attorneys attempt to assist the agents of the IRS or other members of the law enforcement community as requested in their investigations. Administratively, where a bank's systems need improvement, we direct that corrective actions be taken. In certain instances, OCC has used its formal enforcement powers to require that these actions be taken.

Question 2.

Describe the training programs given to your examiners in BSA techniques and procedures. What improvements, if any, have been made since January 1, 1985?

OCC has enhanced the training of its examiners in the BSA. Through a variety of programs, instruction has been and continues to be provided to all levels of examining personnel.

Training Crew

Virtually every new examiner hired by the OCC is placed on a training crew for a period of at least six months. Crews consist of commissioned national bank examiners (leaders), seasoned associate examiners (assistants) and trainees. The program training manual specifically addresses BSA issues and was recently updated to improve the BSA segment. The training crews circulate to national banks and conducts examinations as a team. The training they receive is a combination of "classroom" sessions and on-the-job training. Part of the training agenda is to conduct BSA compliance examinations.


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District Staff Training Conferences
In 1985, District staff training conferences were held for District
examining personnel in all occ Districts. Specialists from the
Washington and District Offices conducted BSA training sessions at
each. The participants in these sessions generally were examiners
with at least two years experience. Senior examiners and district
management also participated in the sessions.
The purpose of the sessions was to: heighten BSA awareness; increase
expertise; provide examination guidance and guidance for referring
cases of noncompliance to Treasury!IRS; and address miscellaneous
concerns and problems encountered in BSA.
Associate National Bank Examiner School for Advanced Study
This school is for examiners preparing for commission as a national
bank/trust examiner. A special BSA section was written for the
school and is part of the curriculum for 1986. The objectives of the
course are twofold: to impart knowledge of BSA requirements and to
ensure that attendees are knowledgeable of OCC's BSA examination
Field Manager Meetings
These meetings are attended by all supervising examiners, District
management and certain District Office staff. A variety of issues
are covered. In many instances, District policies and procedures are
established for those items requiring such action. BSA was a
significant topic in each District during 1985.
White-Collar Crime School


This school trains examiners in the detection of white-collar crime
and how to work with law enforcement matters. Given four times a
year, it is attended by senior commissioned examiners. A special
segment has been developed on BSA and money laundering issues.
Likewise, throughout the course the importance of working
cooperatively with the law enforcement community is stressed.
FBI/Financial Institutions Regulatory In-Service Program
Pursuant to the recommendations of the Department of
Justice/Financial Institutions Regulatory Working Group Agreement of
April 2, 1985, a new training course jointly sponsored by the FBI and
the bank regulatory agencies to be attended by senior FBI agents and
senior examiners from each of the agencies was developed. The
purpose of the course is to cross-train examiners from all of the
federal financial institutions regulatory agencies and FBI agents in
investigations and prosecutions. Since its inception, this course
has been given a number of times in various locations throughout the

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Other Training OCC's Training and Development Division has established a computer-based technical progress evaluation for newly promoted examiners. This system has been implemented in each of the Districts. The purpose of the evaluation is to identify areas where an examiner requires additional training. BSA issues are a part of this program. The Uniform Commission Examination is given to all examiners progressing from the rank of associate national bank examiner to national bank examiner. This is a test of an individual's overall knowledge of laws, policies, and procedures. The incidence of BSA

related material has been increased. OCC is committed to developing and maintaining BSA knowledge of its employees at a high level. Their awareness and knowledge are further increased through our efforts to alert the banking industry and the public to BSA concerns.

Question 3.

Describe efforts your agency has undertaken to improve communication with law enforcement agencies. What legal or policy impediments still exist that interfere with an open communication between the agency and law enforcement officials. Are they justified in your opinion?

In late 1984, the OCC was instrumental in establishing the Justicel Financial Institutions Regulatory Working Group, consisting of senior officials from the OCC, U.S. Department of Justice Criminal Division, the FBI, the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC) and the Federal Home Loan Bank Board (FHLBB). The purpose of this group was to address common problems and to promote cooperation toward the goal of improving the Federal Government's response to white-collar crime in the Nation's federally regulated financial institutions. Through a series of meetings conducted first on a weekly basis and subsequently on a monthly basis, the working group made significant progress in a number of areas. Chief among these are the design and implementation of a standard criminal referral form for use by each of the supervisory agencies and institutions. The purpose of the form is to create a consistent manner of reporting suspected criminal offenses and to provide the Department of Justice with a better means to track criminal referrals. Each agency also worked to adopt new regulations, guidelines or policies similar to OCC's to require all regulated institutions to report potential criminal offenses to law enforcement. Each agency and the Department of Justice also established a network of contacts on a national and local level who could be contacted for purposes of coordinating referrals and prosecutions. This list has been widely distributed and will be periodically updated.


The Department of Justice Fraud Section set up a tracking system to track significant cases (e.g., those involving significant amounts, or bank insiders). The FBI is currently developing a nationwide criminal referral tracking system to compile violations in order to prosecute repetitive offenders even if the amounts are de minimis. The working group also recommended that a joint training course be developed to cross-train FBI agents and examiners. The agencies and the Department of Justice committed resources to this, and a formal training course was developed. A series of joint training sessions have since been held both at the FBI Academy at Quantico and at selected sites around the country. The working group also made specific recommendations for needed amendments to the Right to Financial Privacy Act (RFPA) and the Grand Jury Secrecy Rules. Subsequent to the group's recommendation, the Administration proposed legislation to eliminate the major impediments to law enforcement cooperation contained in the RFPA and the Grand Jury Secrecy Rules. The group strongly backed amendments to the RFPA which would facilitate the ready exchange of information between the agencies and law enforcement authorities without additional notice. The group also supported revisions to the Grand Jury Secrecy Rules which would permit law enforcement authorities to share Grand Jury information with the agencies upon an appropriate showing that such information would raise supervisory concerns. On April 2, 1985, the Attorney General and senior officials of each of the bank regulatory agencies signed an Agreement summarizing the understandings reached by the members of the working group and committing to continued cooperation in each of these areas. Since that time, the group has added to its membership representatives from the National Credit Union Administration and the Farm Credit Administration and continues to conduct monthly meetings on a variety of law enforcement issues. Representatives of the supervisory agencies also use this group as a vehicle for conducting regular meetings on civil enforcement matters. Notwithstanding the significant progress accomplished through the working group. several very serious legal impediments still exist which interfere with full cooperation and coordination between and among the agencies and the law enforcement community. In addition to the the provisions of RFPA and the Grand Jury Secrecy Rules addressed by the working group, additional restrictions contained in various state privacy acts and the Freedom of Information Act continue to impede the full and open exchange of information. The OCC has testified previously before various committees of Congress concerning the specific problems raised by these statutes.


Question 4.

Describe the progress, if any, that has been made between your agency and the Federal Reserve regarding the type of currency shipment reports that are made available by the Fed. Has your agency made_use of such reports? Be specifice

The Customs Service has periodically provided OCC with computer data analyses which have proven to be very useful in targeting compliance efforts. These analyses have permitted comparison of the CTR data with the FRB's currency shipment data to identify cases where a bank's CTR filings fail to correlate appropriately with its currency shipments to or from the Fed. Increased access to such analyses would improve OCC'S ability to target its BSA compliance efforts and thus substantially increase the OCC's ability to effectively monitor BSA compliance. In addition to encouraging increased availability of targeting analyses, OCC is working through the IRS/Financial Institutions Regulatory Working Group to obtain direct on-line access for our examiners to the Treasury Financial Law Enforcement Center CTR database. This access would permit the examiners to ensure that the CTR filings indicated in a bank's records are in fact reflected in Treasury's database.

Question 5.

Describe the management controls over implementation of BSA responsibilities that were in place before January 1. 1985, and changes, if any, since that time.

Although an integrated system of controls over OCC's examination process vas in place prior to January 1, 1985, no separate controls existed over BSA compliance activities. Examinations were conducted pursuant to the Comptroller's Handbook for National Bank Examiners or, where specific information was available raising questions about a bank's BSA compliance, under special instructions from the district or field offices. If compliance problems were uncovered during the examination, OCC district management personnel were alerted and responded with appropriate follow-up action. Information regarding BSA compliance was provided to OCC Washington headquarters and Treasury via a quarterly report which provides a compilation of the number of banks examined per calendar quarter and a listing of the BSA violations noted. Since January 1, 1985 OCC has taken steps to strengthen management controls over BSA. BSA responsibility has been centralized under the Chief National Bank Examiner (CNBE) to streamline communication and provide effective monitoring of BSA compliance. The CNBE's Office is responsible for: developing BSA examination policies and procedures; acting as liaison between OCC and other agencies charged

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