Risks Associated with Money Laundering and Terrorist Financing


Purchase and Sale of Monetary Instruments

Objective. Assess the adequacy of the bank’s systems to manage the risks associated with monetary instruments, and management’s ability to implement effective monitoring and reporting systems. This section expands the core review of statutory and regulatory requirements for purchase and sale of monetary instruments in order to provide a broader assessment of the money laundering risks associated with this activity.

1. Review the policies, procedures, and processes related to the sale of monetary instruments. Evaluate the adequacy of the policies, procedures, and processes given the bank’s monetary instruments activities and the risks they present. Assess whether controls are adequate to reasonably protect the bank from money laundering and terrorist financing.

2. From the volume of sales and the number of locations where monetary instruments are sold, determine whether the bank appropriately manages the risks associated with monetary instrument sales.

3. Determine whether the bank’s system for monitoring monetary instruments for suspicious activities, and for reporting suspicious activities, is adequate given the bank’s volume of monetary instrument sales, size, complexity, location, and types of customer relationships. Determine whether suspicious activity monitoring and reporting systems (either manual or automated) include a review of:

  • Sales of sequentially numbered monetary instruments from the same or different purchasers on the same day to the same payee.
  • Sales of monetary instruments to the same purchaser or sales of monetary instruments to different purchasers made payable to the same remitter.
  • Monetary instrument purchases by noncustomers.
  • Common purchasers, payees, addresses, sequentially numbered purchases, and unusual symbols.226Money launderers are known to identify the ownership or source of illegal funds through the use of unique and unusual stamps.

4. If appropriate, refer to the core examination procedures, "Office of Foreign Assets Control," page 152, for guidance.

Transaction Testing

5. On the basis of the bank’s risk assessment, as well as prior examination and audit reports, select a sample of monetary instrument transactions for both customers and noncustomers from:

  • Monetary instrument sales records.
  • Copies of cleared monetary instruments purchased with currency.

6. From the sample selected, analyze transaction information to determine whether amounts, the frequency of purchases, and payees are consistent with expected activity for customers or noncustomers (e.g., payments to utilities or household purchases). Identify any suspicious or unusual activity.

7. On the basis of examination procedures completed, including transaction testing, form a conclusion about the adequacy of policies, procedures, and processes associated with monetary instruments.


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