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Can you summarize Expanded Examination Procedures for Consolidated and Other Types of BSA/AML Compliance Program Structures > Parallel Banking?
Expanded Examination Procedures for Consolidated and Other Types of BSA/AML Compliance Program Structures > Parallel Banking
Short Summary
This document, part of the Federal Financial Institutions Examination Council (FFIEC) BSA/AML Examination Manual, provides guidance on assessing the adequacy of a bank’s systems to manage the risks associated with parallel banking relationships. Parallel banking relationships exist when at least one U.S. bank and one foreign financial institution are controlled by the same person or group of persons. The document highlights the money laundering risks associated with parallel banking organizations due to regulatory and supervisory differences between the U.S. and foreign financial institutions. It emphasizes the need for independent decision-making authority, guarding against conflicts of interest, and ensuring independent and arm’s-length dealings between the related entities. The document also outlines examination procedures to assess the adequacy of a bank’s systems, including reviewing policies and procedures, evaluating controls, monitoring parallel banking relationships, and conducting transaction testing. Overall, the document aims to mitigate the BSA/AML risks associated with parallel banking relationships.
Whom does it apply to?
U.S. banks and foreign financial institutions that are controlled by the same person or group of persons
What does it govern?
Parallel banking relationships
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
No penalties are mentioned.
Jurisdiction
U.S. Federal Government