DOCUMENT YOUR POSITION
Be sure to state in your BSA/AML Policy that the institution will not provide banking services to CRBs. Make sure to state that your financial institution will not “knowingly” provide services to these customers. That way you can exit a relationship if it is discovered without breaking your policy.
UPDATE YOUR RISK ASSESSMENT
Even if your institution decides not to provide services to CRBs, it is a regulatory expectation that your risk assessment will have a section stating this. You should conduct a risk assessment before deciding if banking CRBs fit your risk profile or not so include those findings in your risk assessment.
REVISE YOUR ACCOUNT OPENING PROCEDURES
Customer due diligence (CDD) is key; you must have strong account opening procedures to be sure you “know your customers”, including beneficial owners. At account opening, ask if the customer is involved in any type of CRB, including CBD sales. Put the responsibility on the customer to be honest.
Ongoing suspicious activity monitoring and enhanced due diligence (EDD) are critical to ensuring CRBs have not slipped through the onboarding process. Closely monitor for cash volumes and other activity that doesn’t fit their line of business. Use keywords from known CRBs to detect those that might be in your institution.
TRAIN THE FRONT LINE
Provide thorough training to front line staff to ensure they understand what may be an ancillary CRB, and how to ask this question in a professional manner. Document all customer and CDD information thoroughly.
If you follow these 5 considerations, your institution is on a good start to successfully avoiding these relationships and maintaining a lower overall risk profile.