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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?
On April 2, 1985, an interagency agreement was signed by the Attorney General,
Revise the criminal referral process:
on specific criminal cases. A Working Group, formed under the agreement meets monthly in order to share information and address problems of common interest. To promote better communication, the FDIC has done the following: (1) Supplied all regional offices and field offices with the names and
phone numbers of contact persons in local FBI offices and U.S. Attorney offices. Conversely, U.S. Attorneys and FBI agents have
been given corresponding FDIC contacts; (2) Meetings have been arranged by FDIC regional officials to get
acquainted with FBI and DOJ officials in their respective areas. In some parts of the country, representatives of the banking agencies, FBI and DOJ meet periodically to discuss criminal referrals and to exchange information and ideas on how to prevent and combat
fraudulent activity: (3) Joint FBI-Bank Examiner training sessions have been organized. Three
have already been held in various parts of the country with two more
Each agency has installed or plans to install a computer system to track criminal referrals. In addition, the Criminal Division has agreed to track major cases and to provide frequent and substantive feedback to the referring agencies. With these management information systems at their disposal, each agency will be able to frequently and systematically receive feedback or provide new information relevant to the criminal cases being tracked. The systems will also have the capability to spot trends, geographic patterns and emerging problems;
The FDIC's regulation requiring banks to report criminal violations on a specific form will become effective shortly. Most banks are reporting on the new forms even though they are not yet required to do so.
The new reporting system provides for personal contact between the reporting entity, either the bank or the FDIC, and the U.S. Attorney's office or the FBI. Here again channels of communication are opened and/or strengthened. To emphasize this point, the American Bankers Association, prompted by the cegulatory requirements to report suspected crimes, has asked that its member banks be given the points of contact in local FBI and U.S. Attorneys offices that have been provided to the financial institutions regulatory agencies;
(6) The FDIC actively participates in the activities of the Bank Fraud
Working Group. The group is compromised of representatives from
Group's objectives are realized and its programs are implemented. In an attempt to emulate the success of the Bank Fraud Working Group, with its focus on Title 18 of the U.S. Code, another interagency group focusing on BSA compliance and money laundering was formed in 1985. This group is chaired by a representative of the Treasury Department and includes IRS, FDIC, OCC and FRS. One of the group's primary objectives was to revise the Bank Secrecy Act examination procedures. A finished product was recently submitted to Treasury for final approval.
Another group, chaired by IRS, meets monthly. This group is comprised of representatives from IRS, FDIC, OCC, FRS, FHLBB, NCUA, Treasury, Customs and SEC. The objectives of this group are to improve communications among the participating agencies and to resolve difficulties that arise in enforcing BSA regulations. These meetings provide a good forum for informing the civil enforcement agencies of the current thinking at Treasury and of recent developments in criminal cases. IRS's Criminal Investigation Division is an active participant. At a recent meeting, a presentation on evidentiary matters relating to BSA prosecutions was made by DOJ's Narcotics and Dangerous Drugs Section.
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 specific.
At this time there is no direct transfer of currency shipment reports from the Federal Reserve to the FDIC; however, FRS supplies this information to the Department of the Treasury (U.S. Customs Service) where it is correlated with information from CTRS. The objective of this analysis is to identify banks that exhibit the characteristics of money laundering. Analytical reports prepared by Customs are then given to FDIC and passed along to respective regional offices for further review and follow-up. Each analysis identifies banks in a specific geographical area that have filed no CTRS or have filed fewer CTRS than banks of similar size. Each bank so identified is targeted by FDIC for a special BSA compliance review at the next regular safety and soundness or compliance examination. If no regular examination is scheduled in the next six-months, a special visit is considered. We are strong supporters of this type of analysis for it permits us to more effectively target institutions for BSA examinations.
Describe the management controls over implementation of BSA responsibilities that were in place before January 1, 1985 and changes, if any, since that time.
Each FDIC regional office has designated at least one person to be responsible for reviewing BSA compliance examination reports and for initiating any follow-up of apparent violations contained therein. This system has proven effective in the past and no changes are contemplated. The same regional official is responsible for reviewing and processing criminal referrals and recommendations for civil money penalties that are generated as a result of BSA compliance reviews. Aggressive follow-up action is taken to ensure that
CTRS that were not filed as of our examination date are ultimately filed with the IRS and we attempt to ensure future compliance by requiring periodic progress reports from the bank on its compliance efforts. Examiner visitations and follow-up examinations are scheduled where appropriate. Continued noncompliance may result in a memorandum of understanding, a recommendation to Treasury for civil money penalties or initiation of a Cease and Desist Order.
6. Question: Describe the initiatives your agency has taken to broaden the knowledge of and exposure to reporting requirements of the BSA for those institutions you regulate.
The FDIC uses the Bank Letter, a formal communication distributed to all State nonmember banks and insured savings banks, to inform the banking community of current developments in BSA compliance. Bank Letters address changes or amendments to the regulations as well as any changes in the reporting forms and instructions. The FDIC also maintains open lines of communication with the banks that it supervises. Banks often call in questions regarding BSA matters. Sometimes these calls result in leads to possible money laundering activity.
Besides informing banks of changes to the BSA regulations, reporting forms and any other important developments, FDIC holds regional compliance seminars covering consumer laws and the BSA regulations. Banks located in the FDIC regions hosting the program are invited to attend. We also encourage FDIC examiners to address bankers' groups and employee organizations on BSA matters. In 1985, the FDIC assisted in producing a program sponsored by the American Bankers Association (ABA) to educate bankers on money laundering and Bank Secrecy Act compliance. The program, a one-day pretaped video teleconference, was shown at 61 sites throughout the country. The teleconference was well received by the banking community and brought forth about 5.000 questions from the attendees.
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 FDIC's Legal Division and Division of Bank Supervision were involved from the start in the Attorney General's Bank Fraud Working Group, as drafters of the agreement and later as working members of the group. The FDIC's Division of Liquidation became involved after the agreement was signed. As early as
July 1984, well before the formation of the interagency working group. EDIC
enactment of the new bank fraud statute, 18 U.S.C. 1344, and the
instructed to begin citing these statutes in criminal referrals: (2) In March 1985. FDIC redefined its policy and issued a directive to
clarify the type and amount of information that could be disclosed to law enforcement officials in connection with criminal referrals. The directive also encouraged greater personal contact and information
sharing between examiners and FBI agents; (3) Also in March, FDIC provided its regional offices with the names of
contact persons in U.S. Attorneys offices and local FBI offices. Regional Officials were again directed to meet with the law enforcement officials named as contacts in their regions. Updated
lists are provided periodically: (4) In May 1985. Regional Offices were given copies of the Points of
Agreement adopted by the interagency group and again directed to work to improve channels of communication;
In October 1985, FDIC proposed a new regulation requiring the banks
In December 1985, FDIC examiners were instructed to begin referring criminal violations on the newly adopted form; and
In March 1986, FDIC sponsored an interagency school in San Francisco on white collar crime. One of the objectives of the school was to improve cooperation between bank examiners and FBI agents. This session was one of the five sessions put on by the FBI and sponsored by the member agencies of the working Group.