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with BSA oversight; maintaining lines of communication with respect to the BSA between the industry and OCC; reviewing BSA referral recommendations; and ensuring adequacy of examiner BSA training. Information flow has been better controlled by directing all BSA matters through the CNBE. Information such as U.S. Customs Service analyses of potential BSA compliance problems, Customs Service analyses of currency flows in certain areas of the United States, notification of IRS/Treasury BSA criminal investigations, and recommendations for referrals by bank examiners of banks in violation of BSA are all part of the flow of data through the CNBE's Office. These items are tracked by the CNBE's Office to ensure proper control and follow-up.

The CNBE's Office is supported by designated BSA specialists in each District. These individuals deal directly with examiners, bankers, and the CNBE's Office and are also available to conduct BSA training. This structure has served to streamline OCC's BSA oversight.

This

In addition to the CNBE's Office, the Enforcement and Compliance (E&C) Division in Washington plays an important role in the BSA process. Division is involved in the recommendation of BSA referrals to Treasury/IRS for assessment of civil and/or criminal penalties. A designated individual is responsible for tracking referrals through the use of the Enforcement and Compliance Information System (ECIS), making recommendations on the cases to pursue and providing advice to field examiners. The District Office legal staffs likewise work closely with the District BSA specialists, the E&C attorneys, and representatives of the law enforcement community to coordinate OCC's efforts.

Finally, policies and procedures are being established which will formalize the referral process and fix specific responsibilities. Copies have been provided to the IRS/Financial Institutions Regulatory Working Group for review. Once the document is put in final form, a uniform set of criteria and procedures will be in place for all federal financial institutions regulatory agencies.

Question 6.

Describe the initiatives your agency has taken to broaden knowledge of and exposure to reporting requirements of the BSA for those institutions you regulate.

OCC has advanced several different methods to broaden national bank knowledge of and exposure to the reporting requirements of BSA.

Circulars

Banking bulletins and banking circulars have been issued by OCC whenever needed to address problems with BSA. Since January 1, 1985, several new issuances dealing with BSA have been distributed.

Addressed lack of compliance with BSA, the requirements of the Act and the methods for bank management to provide information to OCC and the Department of the Treasury when violations are detected.

Banking Circular

193. Supplement 1. dated May 9, 1985

Transmitted a copy of a Treasury Department opinion regarding the filing of Form 4790, Report of International Transportation of Currency or Monetary Instrument. The opinion clarified Treasury's position regarding banks' hiring private courier services to effect the international transportation of currency through a common carrier.

Identified Detroit as the new location to which to forward CTRs, and provided the name of a Treasury Department contact for BSA questions.

Transmitted copies of the Criminal Referral Form designed by the Justice/Financial Institutions Regulatory Working Group. These forms are to be used by financial institutions to report

instances of known or suspected crimes. The BSA is specifically listed on these forms together with specific referral

instructions.

.. Banking Bulletin

85-27. dated December 20. 1985

Transmitted a copy of an IRS press release regarding the revised Form 4789 which was to become effective January 1, 1986, with implementation July 1, 1986.

Banking Circular

193. Supplement 3. dated January 27. 1986

Transmitted a copy of an IRS press release regarding IRS's new responsibility of reviewing exemption lists and reviewing requests for special exemptions.

Banking Circular - 193. Supplement 4. dated March 27. 1986

Distributed IRS's guidelines to banks who wish to request special exemptions from the financial reporting requirements of BSA.

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:

Banking Bulletin - 86-9. dated April 9. 1986

Many banks have been found to have submitted incomplete CTRs to IRS. These institutions are requested to correct and resubmit the CTRS. Because no formal criteria had been established for this process, banks would fill out a new CTR and submit it to IRS. The filing would be added to the data base causing a duplication. This bulletin provides IRS/Treasury's guidelines for filing amended CTRs to mitigate duplication.

Banking Circular - 171 and Supplement, dated January 3, 1985

In addition to banking issuances addressing BSA, OCC has issued banking bulletins to the industry and the public alerting them to potentially fraudulent schemes perpetrated by certain offshore shell banks that may be operating improperly or illegally in the U.S. These bulletins continued through the year and were used to gather information for the use of banks and the law enforcement community.

Comptroller's Manual for National Banks

This is the OCC's manual containing summaries of relevant laws and regulations (including those pertaining to BSA) applicable to national banks. This manual is used by OCC's examiners and is distributed to all national banks. An update to the manual was issued in July 1985 addressing several changes in the BSA. In October 1985, several clarifying and non-substantive changes in the BSA regulations were listed in the Federal Register and became effective November 21, 1985. These "housekeeping" amendments will be included in the next regular manual update.

Comptroller's Handbook for National Bank Examiners

The Handbook contains the bank examination procedures used by OCC examiners. Separate BSA procedures are set forth. All national banks have copies of these procedures. The OCC has been working with a task group at Treasury to update and revise these procedures. Upon completion of Treasury's review, these new procedures will replace OCC's existing procedures and will be adopted by all of the financial institutions regulatory agencies. The revised version will be distributed to examiners and national banks. Banks will be encouraged to implement the procedures internally to assess compliance with BSA.

American Bankers Association (ABA) Video Conference

Together with the Federal Reserve and the FDIC, OCC played a central role in the development of a training segment entitled "Examiners" for use by the ABA in a BSA video conference which was presented in 61 locations across the country between September and November, 1985. Between 5,600 and 6,000 individuals attended these presentations. The regulatory agencies' segment developed

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to simulate examiner discussion of the results of an "examination" prior to meeting with bank management. The simulation illustrated what examiners look for in the BSA area during an examination and what banks should be doing to enhance BSA compliance.

Speeches and seminars

Over the past year, OCC representatives have spoken to various banking and legal groups about BSA problems and methods to ensure compliance. Many banks and private groups themselves also put on seminars concerning compliance with BSA.

Newly Chartered Banks

Prior to the opening of a newly chartered bank, OCC conducts a pre-opening examination. The purpose of this examination is to ascertain whether the bank has proper forms, manuals, systems and procedures to operate effectively. The OCC's Bank Organization and Structure Department is reviewing the pre-opening procedures to ensure that the BSA is adequately addressed.

Question 7.

Describe the role your agency played in the Attorney General's Bank Fraud Working Group. Cite specific examples on how your agency has implemented that agreement.

The OCC was a prime mover and principal participant in the Justice/Financial Institutions Regulatory Working Group and continues to be a very active participant. Senior OCC officials are working members of the group, and the activities and recommendations of the group are fully discussed throughout the OCC.

Considerable time and resources have been devoted at OCC to design, create, and distribute the uniform criminal referral forms developed through the efforts of the working group. There are two such forms: for major cases and one for de minimis, non-insider violations.

one

OCC has also been an active participant in the training programs developed and sponsored by the working group. OCC examiners have trained along with examiners from other agencies and FBI agents, and OCC provides instructors to assist in the program. In May of this year, working with the staff of the FBI Academy at Quantico, OCC's Southeastern District Office in Atlanta, Georgia, will sponsor a regional training program for examiners and FBI agents.

In October 1985, OCC proposed a regulation to replace its current Interpretive Rule that requires national banks to report violations of criminal law. Numerous comments were received from a variety of sources and the OCC is currently in the process of finalizing its regulation.

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The other agencies are implementing similar regulations or guidelines. Thus, as well as there being consistency in the forms to be submitted, all financial institutions will be under a similar requirement to make referrals.

OCC continues to rely on and has enhanced its automated Enforcement and Compliance Information System (ECIS) to track criminal referrals. This system now enables us to track referrals and generates regular reports which are distributed by OCC's District Counsel to U.S. Attorneys for feedback on the status of referrals. In addition, customized reports on BSA referrals will be sent to the Treasury Department and the IRS. ECIS was recently expanded to include the most significant criminal referrals made by the other regulatory agencies and records of disciplinary actions taken by the OCC or the other agencies against bank officials. The system thus can also be used in our background investigations for new banks or in change in bank control applications.

Points of contact for law enforcement matters have been established in each District and in the Washington Office. District Counsel have been specifically required to establish and maintain contact with individual United States Attorneys' Offices, FBI offices, and strike forces for the purpose of establishing coordination for criminal matters. To add to the swiftness of response to law enforcement inquiries, we have formally delegated additional authority to the District Offices, permitting them to respond and provide information directly. We have likewise worked with representatives of the banking community to designate contacts within their organizations to ensure the swift handling of problems. OCC has made copies of the working group's Agreement available to all national banks, seeking suggestions on how the Agreement can be improved. OCC representatives also make presentations to representatives of the industry to explain the importance of the criminal referral process.

OCC has also used the working group as a central point of contact and clearinghouse for the purpose of facilitating the exchange of information on matters that may cross between the jurisdictions of each agency.

Question 8.

Submit copies of all revised regulations, banking circulars. newsletters. internal communications. updates to manual for examiners, and any other written information pertaining to enforcement efforts of the BSA undertaken by your agency since January 1. 1985.

See attached Appendix.