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Risk Management Manual of Examination Policies

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Section 17.1 - Bank of Anytown-Report of Examination

Violations of Laws and Regulations
99999

Financial Recordkeeping
Section 103.27(a) of the Treasury Department’s Financial Recordkeeping regulations requires a bank to file a Currency Transaction Report (CTR) within 15 days following the day on which a reportable transaction occurs.

Examiners identified numerous instances where CTRs were not filed within the required 15-day period. This infraction was also cited at the previous FDIC examination. Between October 2003 and July 2004, 289 of 944 CTRs (31 percent) were filed late. In many cases, CTRs were signed by the approving official more than 15 days after the transaction date. The time between the transaction date and receipt by the Treasury Department on these late filings was generally around 20 to 25 days, with a few exceeding 70 days.

BSA Officer Donna Ludlow stated that some of the late CTRs were filed late after an internal audit noted that the forms had not been submitted; however, she could offer no explanation as to why the remaining CTRs were filed late. Chairman of the Board Ratzlaff and President Lincoln stated that new procedures would be implemented to ensure all CTRs are submitted in a timely manner in the future.

Prior Board Approval of Insider Loans – Regulation O
The Federal Reserve Board's Regulation O, which implements Section 22(h) of the Federal Reserve Act and is made applicable to insured nonmember institutions by Section 18(j)(2) of the Federal Deposit Insurance Act covers transactions with bank insiders. Section 215.4(b)(1) of Regulation O requires extensions of credit by an institution to a director or related interest exceeding the greater of $25M or 5 percent of equity capital and reserves to have prior approval of the institution's board of directors.

The following loans are apparent violations of this section in that they were extended with the prior approval of the Executive Loan Committee, which is composed of only three Board members, rather than by the full Board.

Borrower Date of Note

Original Amount

Lincoln, Allie C. 12/11/2003

$500M

Any Body, Inc. 12/28/2003

$250M

(A related interest of President Lincoln and Director Killingbird.)

President Lincoln stated that these exceptions were the result of oversight. He further indicated that bank policy requires that all insider loans receive the prior approval of the full Board. Examiners noted that all other insider loans received prior Board approval. President Lincoln and the Board of Directors promised future compliance.



Last Updated 02/02/2005 supervision@fdic.gov