An Automated Clearing House is the network that processes FI-to-FI transfers of funds (like direct deposit and direct payment). NACHA, In the US there are two primary ACH "Operators": FedACH (the Federal Reserve) and The Clearing House operated by NACHA (private) - the Electronic Payments Network (EPN). NACHA is the national assosication that establishes the operating rules, guidelines and requirements for ACH payments. However, there are aslo regional payment associations (RPAs) that provide local support at the state level.
As a core component of an effective BSA program, Anti-Money Laundering efforts are such a large part of a compliance officer's job that these programs are often referred to as BSA/AML. In addition to the BSA, the Annunzio-Wylie Anti-money Laundering Act is a key AML law.
An inspection or review conducted by either an employee of the FI that is independent of the daily operations or by an independent third-party. An auditor will issue a report of findings for any deficiencies or violations but does not have authority to impose penalties.
Broadly speaking, a bank is an organization that accepts deposits and makes loans.
A Beneficial Owner (BenO) is someone who has a material interest in a business, and as part of CDD a business must identify beneficial owners to an FI. The standard threshold is to disclose persons with at least a 25% interest in the business, but an FI can request information on those with a lesser percentage (i.e. 10%). The definition of a beneficial owner also includes at least one person with significant control or authority, such as the CEO. This rule only applies to "legal entities". Unlike CIP, existing customers may not be exempt and the BenO procedures apply each time a new account is opened.
The Currency and Foreign Transactions Act, also known as the Bank Secrecy Act (BSA) of 1970, requires FIs to put measures in place to combat money laundering. Part of this is a requirement to file SARs and CTRs. Often associated with Anti-Money Laundering programs and referred to as BSA/AML.
Any day the FI is open to the public for substantially all operations. Generally, Monday - Friday unless it is a federal holiday. The Fed issues the schedule of days considered to be a federal holiday for this purpose.
An acronym for "Capital adequacy, Asset quality, Management, Earnings, Liquidity, and (Market/Interest Rate) Sensitivity," this is a measure of a bank's soundness where 1 is the highest rating and 5 the lowest. While the CAMELS rating is not shared with Green Check, we recommend that an institution considering a cannabis banking program have a CAMELS rating of 1 or 2.
Customer due diligence is the process by which the FI collects information that allows it to establish a baseline of transactional activity that is considered "normal" for each specific customer.
In essence, a license to operate a financial institution, issued by either state or federal banking authorities. Banks seeking federal/national charters apply to the OCC, while credit unions seeking a federal charter apply to the NCUA.
The USA PATRIOT Act requires FIs have robust Customer Identification Programs to verify the identity of new customers, preventing illicit funds from entering the financial system. CIP requires certain identifying information be collected and then verified using documents (i.e., driver's license, state ID card), non-documentary methods (e.g., credit report) or both. FI's are only required to conduct CIP on each customer one time; existing customers may be exempt
A memorandum issued April 29, 2013 to all states' attorneys by James Cole, Deputy Attorney General, the "Guidance Regarding Marijuana Enforcement" outlined the eight law enforcement priorities of the Department of Justice regarding legal cannabis businesses. While this was technically rescinded by Jeff Sessions, nothing took its place so the Cole Memo is still effectively in place.
Enterprise-wide framework for maintaining the saftey and soundness of the FI. The framework consists of the principles and practices established by the FI to protect against over-arching risks. Often referred to as Enterprise Risk Management (ERM) and Governance, Risk, and Compliance (GRC).
A corporate credit union provides banking services to another credit union. A credit union is not required to have a corporate credit union.
A bank that provides banking services to another bank. A bank is not required to have a correspondent bank.
A tax-exempt, not-for-profit financial institution owned by its members. To be eligible to open an acount, a person must meet certain criteria, like living in a town or belonging to a union. This criteria is known as "field of membership".
A Currency Transaction Report is filed with FinCEN whenever an account holder makes a deposit of $10,000 or more, or a series of related deposits that together equals $10,000 or more.
The definition may vary depending on the regulation. Generally existing account-holders but in some instances may include individuals that no longer have a relationship with the FI.
Due diligence is the process by which an FI fulfills its CIP obligations to positively identify account holders during the application process. Higher risk customers merit a closer look, so FI's establish Enhanced Due Diligence requirements that go beyond the standard process all account holders go through. For instance, requiring a potential account holder provide a state-issued ID to verify their identity, EDD might require them to also disclose tax returns or business plans.The level and extent of EDD applied to each customer is determined by the level of risk posed by the customer.
An "inspection" or review by a regulatory agency of the FI's compliance with all applicable laws and regulations. These reviews are conducted by examiners who have the authority to impose penalties for violations. The lead examiner is referred to as the Examiner-in-Charge or EIC.
The Federal Deposit Insurance Corporation offers depository insurance to banks. The FDIC is the primary regulator for state chartered banks and thrifts/savings banks that are not members of the Fed but also has regulatory authority over national banks, thrifts, and state-chartered banks whose deposits are covered by FDIC insurance.
The Federal Reserve system (the "Fed") manages the stability of the US financial system, from setting interest rates to providing loans to banks. The Fed regulates state chartered member banks, bank holding companies, and foreign branches of U.S. national and state member banks; National banks are required to be members of the Fed but are regulated by the OCC.
The Federal Financial Institutions Examination Council is the agency that establishes uniform standards for examining FIs - both banks and credit unions.
The Financial Crimes Enforcement Network is the arm of the Department of Treasury tasked with keeping illicit funds out of the US financial system. FinCEN is responsible for administering the BSA. They issued the guidance that gave financial institutions a framework to confidently bank the cannabis industry.
Issued by the FinCEN on February 14, 2014, "BSA Expectations Regarding Marijuana-Related Businesses (FIN-2014-G001) was the Department of Treasury's follow-up to the Cole Memo that specifically addressed the financial system by identifying a set of red flags that might suggest they were facilitating money laundering. They also defined three new, cannabis-specific SARs - Marijuana Limited, Marijuana Priority, and Marijuana Termination.
How quickly a financial institution needs to make deposited funds available to you. Also referred to as Reg CC.
For the purpose of the BenO rules, a legal entity includes a corporation, limited liability company, or other entity that is created by the filing of a public document with a Secretary of State or other similar office, a general partnership, and any similar entity formed under the laws of a foreign jurisdiction that opens an account.
The National Credit Union Association offers insurance to credit unions and is the regulator for nationally chartered credit unions. They have oversight over insured stated chartered CUs; however, the FTC is the primary regulator for state charted CUs.
The Office of the Comptroller of the Currency issues charters and regulates national banks and thrifts.
Originating Depository Financial Institution initiates an ACH payment on behalf of their customer (the originator).
The Office of Foreign Assets Control is part of the Department of the Treasury. They are tasked with enforcing economic and trade-based sanctions against persons, organizations and certain countries. They keep a list of these parties that financial institutions must consult on a regular basis to make sure they aren't engaging in business with a targeted party (e.g., providing services that fund terrorism, drug trafficking, etc.) Any person under US jurisdiction, regardless of where he or she is located must comply with OFAC requirements.
A Receiving Depository Financial Institution receives a payment initiated by a customer's ODFI.
Risks are certain variables that a financial institution must anticipate and manage in order to reduce negative outcomes. Risk Governance focuses primarily on strategic, reputational, compliance and operational risk and ensures adequate oversight of credit, liqudity, interest rate and price risk.
The identification of inherent threats and vulnerabilities related to each type of risk (inherent risk); Inherent risk is typically quantified and either increased or decreased by the likelihood and probability of occurrence. This information / analysis is then used to identify existing controls that mitigate risk as well as whether additional controls are needed to further reduce the FIs risk exposure.
A financial institution's overall risk exposure as determined by various factors such as products and services offered, types of customers served, and geographic location.
A penalty, restriction, or ban imposed on a financial institution by a regulatory agency or agencies. Most often referred to as an Enforcement Action (EA). The type of sanction or action taken can vary by type and severity and can be imposed on the FI or an employee of the FI. Examples of EAs include written formal agreements, civil monetary penalties (CMPs), criminal fines, cease and desist orders, and closure or liquidation of the FI.
A Suspicious Activity Report is filed with FinCEN whenever an FI suspects criminal activity related to an account-holder's transaction or set of transactions. An FI may not disclose the filing of a SAR report except to FinCEN or other authorized law enforcement agencies. Unauthorized disclosure of a SAR is a violation of federal law so both civil and criminal penalties may be imposed. There are three cannabis-specific SARs: Marijuana Limited, Marijuana Priority, Marijuana Termination.