Anti-Money Laundering Policy

ANTI-MONEY LAUNDERING (AML) POLICY

Bank Secrecy Act/Anti-Money Laundering Compliance Program

DOCUMENT INFORMATION

SECTION 1: POLICY STATEMENT AND OVERVIEW

1.1 Policy Statement

[________________________________] (the "Company") is committed to full compliance with all applicable anti-money laundering (AML) laws and regulations, including the Bank Secrecy Act (BSA), the USA PATRIOT Act, the Anti-Money Laundering Act of 2020, and implementing regulations issued by the Financial Crimes Enforcement Network (FinCEN).

The Company prohibits money laundering, terrorist financing, and other financial crimes and has established this AML Compliance Program to detect and prevent such activities.

1.2 Scope

This policy applies to:

☐ All employees of the Company
☐ All officers and directors
☐ All independent contractors and agents
☐ All business lines and subsidiaries
☐ All customers and business relationships

1.3 Program Components

This AML Compliance Program includes:

1. Internal Policies, Procedures, and Controls - Reasonably designed to prevent the Company from being used for money laundering or terrorist financing
2. AML Compliance Officer - Designated person responsible for implementing the program
3. Training Program - Ongoing training for appropriate personnel
4. Independent Testing - Periodic independent review of the program

SECTION 2: AML COMPLIANCE OFFICER

2.1 Designation

The Company designates the following individual as the AML Compliance Officer:

2.2 Qualifications

The AML Compliance Officer shall have:

☐ Demonstrated knowledge of BSA/AML requirements
☐ Understanding of the Company's products, services, customers, and geographic locations
☐ Authority to implement and enforce the AML program
☐ Appropriate training and certifications (CAMS or equivalent preferred)
☐ Direct access to senior management and the Board of Directors

2.3 Responsibilities

The AML Compliance Officer is responsible for:

☐ Implementing and administering the AML Compliance Program
☐ Ensuring policies and procedures are current and effective
☐ Coordinating independent testing of the program
☐ Filing Suspicious Activity Reports (SARs) with FinCEN
☐ Overseeing Currency Transaction Reports (CTRs) filing
☐ Serving as primary contact for regulatory examinations
☐ Providing AML training to employees
☐ Reporting to senior management on AML matters
☐ Updating risk assessments
☐ Monitoring changes in regulations

2.4 Escalation Authority

The AML Compliance Officer has authority to:

☐ Decline to open accounts
☐ Close accounts presenting unacceptable risk
☐ File SARs without prior approval from business units
☐ Escalate concerns directly to senior management or the Board
☐ Suspend transactions pending investigation

SECTION 3: RISK ASSESSMENT

3.1 Risk-Based Approach

The Company's AML program is risk-based, focusing resources on areas of highest money laundering and terrorist financing risk.

3.2 Risk Categories

Customer Risk Factors:

Geographic Risk Factors:

Product/Service Risk Factors:

3.3 Risk Assessment Process

☐ Risk assessment conducted at least annually
☐ Risk assessment updated when business changes significantly
☐ Risk assessment documented and maintained
☐ Results reported to senior management

Current Risk Assessment Date: [__/__/____]
Next Review Due: [__/__/____]

SECTION 4: CUSTOMER IDENTIFICATION PROGRAM (CIP)

4.1 Program Requirements

The Company's CIP is designed to enable the Company to form a reasonable belief regarding the true identity of each customer.

4.2 Information Collection - Individuals

Required Information:

☐ Full legal name
☐ Date of birth
☐ Residential address (not P.O. Box)
☐ Identification number:
☐ For U.S. persons: Social Security Number
☐ For non-U.S. persons: Taxpayer ID, passport number, alien ID, or government-issued ID

4.3 Information Collection - Entities

Required Information:

☐ Full legal name
☐ Principal place of business address
☐ Taxpayer Identification Number (EIN)
☐ State/Country of organization

Beneficial Ownership (CDD Rule):

☐ Identify all beneficial owners with 25% or more ownership interest
☐ Identify at least one individual with significant managerial control
☐ Collect CIP information for all beneficial owners

4.4 Identity Verification

Documentary Verification:

☐ Government-issued ID with photograph (driver's license, passport)
☐ ID must be unexpired
☐ Copy retained in accordance with records retention policy

Non-Documentary Verification:

☐ Consumer reporting agency data
☐ Public databases
☐ References from other financial institutions
☐ Financial statements

4.5 Verification Timeframe

☐ Verification completed within a reasonable time after account opening
☐ Verification completed before account becomes fully operational
☐ Enhanced verification for higher-risk customers

4.6 Customer Notice

☐ Notice provided to customers that information is being requested to verify identity
☐ Notice provided before or during account opening

Sample Notice Language:
"IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT: To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents."

SECTION 5: CUSTOMER DUE DILIGENCE (CDD)

5.1 Standard Due Diligence

For all customers:

☐ Collect and verify identifying information
☐ Understand the nature and purpose of the customer relationship
☐ Develop a customer risk profile
☐ Conduct ongoing monitoring

5.2 Enhanced Due Diligence (EDD)

For higher-risk customers, conduct enhanced due diligence including:

☐ Additional identity verification
☐ Source of funds/wealth verification
☐ Purpose of account/relationship
☐ Expected account activity
☐ Closer scrutiny of transactions
☐ Senior management approval for account opening
☐ More frequent account reviews

EDD Required For:

☐ Politically Exposed Persons (PEPs)
☐ Customers from high-risk jurisdictions
☐ Cash-intensive businesses
☐ Money services businesses
☐ Non-profit/charitable organizations
☐ Correspondent accounts
☐ Private banking relationships

5.3 Ongoing Monitoring

☐ Transaction monitoring conducted
☐ Customer information updated periodically
☐ Changes in activity patterns investigated
☐ Risk profile updated as appropriate

SECTION 6: TRANSACTION MONITORING AND SUSPICIOUS ACTIVITY

6.1 Transaction Monitoring

The Company monitors customer transactions to identify potentially suspicious activity through:

☐ Automated transaction monitoring systems
☐ Manual review of exception reports
☐ Employee referrals
☐ Periodic account reviews
☐ Law enforcement inquiries

6.2 Red Flags and Indicators

Customer Red Flags:

☐ Customer refuses to provide required CIP information
☐ Identification documents appear altered or forged
☐ Information provided is inconsistent with other sources
☐ Customer is evasive about source of funds
☐ Customer's address is associated with multiple unrelated accounts
☐ Customer is on OFAC or other sanctions list
☐ Customer is subject to negative news or adverse media

Transaction Red Flags:

☐ Transactions inconsistent with customer profile
☐ Large cash deposits followed by immediate wire transfers
☐ Transactions just below reporting thresholds (structuring)
☐ Unusual or unexplained international transfers
☐ Transactions involving high-risk jurisdictions
☐ Layering of transactions to obscure source of funds
☐ Round dollar amounts or repetitive transaction patterns
☐ Third-party funding without explanation
☐ Rapid movement of funds through multiple accounts

6.3 Suspicious Activity Investigation

Investigation Procedures:

1. ☐ Document the triggering activity
2. ☐ Review account history and documentation
3. ☐ Gather additional information as needed
4. ☐ Consult with AML Compliance Officer
5. ☐ Document investigation findings
6. ☐ Determine if SAR filing is warranted
7. ☐ Take appropriate action (file SAR, close account, etc.)

6.4 Investigation Documentation

☐ All investigations documented in writing
☐ Investigation file includes:
☐ Description of suspicious activity
☐ Relevant account documents
☐ Transaction records
☐ Analysis performed
☐ Decision and rationale
☐ Files retained per records retention policy

SECTION 7: SUSPICIOUS ACTIVITY REPORTING

7.1 SAR Filing Requirements

A SAR must be filed when the Company knows, suspects, or has reason to suspect that a transaction:

☐ Involves funds from illegal activity
☐ Is designed to evade BSA reporting requirements
☐ Lacks a lawful purpose
☐ Involves the use of the Company to facilitate criminal activity

7.2 Filing Thresholds

7.3 Filing Timeline

7.4 SAR Filing Procedures

1. ☐ AML Compliance Officer reviews investigation
2. ☐ SAR drafted using FinCEN BSA E-Filing system
3. ☐ SAR reviewed for accuracy and completeness
4. ☐ SAR filed electronically with FinCEN
5. ☐ Confirmation of filing retained
6. ☐ Supporting documentation maintained
7. ☐ SAR not disclosed to subject of report (Tipping Off prohibition)

7.5 SAR Confidentiality

☐ SAR filings are confidential
☐ Disclosure to subject is prohibited (18 U.S.C. § 1510(b)(2))
☐ Safe harbor protection for good faith filings (31 U.S.C. § 5318(g)(3))
☐ SAR-related documents maintained separately and securely

SECTION 8: CURRENCY TRANSACTION REPORTING

8.1 CTR Filing Requirements

A Currency Transaction Report (CTR) must be filed for each transaction in currency (cash) exceeding $10,000 conducted by or on behalf of one person in a single day.

8.2 CTR Filing Procedures

☐ CTR filed within 15 calendar days of transaction
☐ Filed electronically via FinCEN BSA E-Filing
☐ Multiple transactions aggregated for single customer
☐ CTR not required for exempted customers (with proper documentation)

8.3 CTR Exemptions

Exempt customers may include:

☐ Banks and financial institutions
☐ Federal, state, and local governments
☐ Listed public companies
☐ Subsidiaries of listed public companies
☐ Eligible non-listed businesses (Phase II exemption)

Exemption Requirements:

☐ Exemption documented on FinCEN Form 110
☐ Annual review of exempt customers
☐ Exemption revoked if no longer appropriate

SECTION 9: OFAC COMPLIANCE

9.1 Sanctions Screening

☐ All customers screened against OFAC Specially Designated Nationals (SDN) List
☐ Screening conducted at account opening
☐ Periodic re-screening conducted
☐ Screening conducted when lists are updated
☐ Transactions screened for sanctioned parties and countries

9.2 OFAC Lists Monitored

☐ Specially Designated Nationals (SDN) List
☐ Consolidated Sanctions List
☐ Sectoral Sanctions Identifications (SSI) List
☐ Foreign Sanctions Evaders (FSE) List
☐ Non-SDN Palestinian Legislative Council List

9.3 Match Handling

☐ Potential matches investigated immediately
☐ True matches result in blocked transactions
☐ OFAC contacted for guidance when necessary
☐ Blocked assets reported to OFAC within 10 business days

SECTION 10: INFORMATION SHARING

10.1 Section 314(a) Requests

☐ Process established to respond to FinCEN 314(a) requests
☐ Responses provided within required timeframe (14 days)
☐ Search results documented
☐ Confidentiality maintained

10.2 Section 314(b) Voluntary Sharing

☐ Company enrolled in 314(b) program: ☐ Yes ☐ No
☐ Annual certification filed with FinCEN
☐ Procedures for sharing established
☐ Safe harbor protections understood

SECTION 11: RECORDKEEPING

11.1 Record Retention Requirements

11.2 Record Storage

☐ Records maintained in easily retrievable format
☐ Electronic records properly backed up
☐ Access to records limited to authorized personnel
☐ Records available for regulatory examination

SECTION 12: TRAINING PROGRAM

12.1 Training Requirements

All applicable employees must receive AML training:

☐ Upon hiring (within 30 days)
☐ Annually thereafter
☐ When significant changes to regulations or procedures occur

12.2 Training Content

Training covers:

☐ Overview of BSA/AML requirements
☐ Company's AML policies and procedures
☐ Customer identification requirements
☐ Red flags and suspicious activity indicators
☐ SAR and CTR reporting obligations
☐ OFAC compliance
☐ Employee responsibilities
☐ Consequences of non-compliance

12.3 Training Documentation

SECTION 13: INDEPENDENT TESTING

13.1 Testing Requirements

☐ Independent testing conducted annually (or per risk assessment)
☐ Testing performed by qualified independent party
☐ Testing covers all aspects of AML program

13.2 Testing Scope

☐ Risk assessment adequacy
☐ CIP procedures and compliance
☐ CDD and EDD procedures
☐ Transaction monitoring effectiveness
☐ SAR filing timeliness and quality
☐ CTR filing accuracy
☐ OFAC screening
☐ Training program effectiveness
☐ Recordkeeping compliance
☐ Board and management oversight

13.3 Testing Documentation

SECTION 14: BOARD AND SENIOR MANAGEMENT OVERSIGHT

14.1 Board Responsibilities

☐ Approve AML policy annually
☐ Receive periodic reports on AML compliance
☐ Ensure adequate resources for AML program
☐ Review independent testing results
☐ Oversee remediation of deficiencies

14.2 Senior Management Responsibilities

☐ Support AML Compliance Officer
☐ Ensure policy implementation
☐ Allocate resources appropriately
☐ Review AML reports and metrics
☐ Escalate significant issues to Board

14.3 Reporting Schedule

SECTION 15: POLICY VIOLATIONS AND DISCIPLINARY ACTION

15.1 Consequences of Non-Compliance

Violations of this policy may result in:

☐ Verbal warning
☐ Written warning
☐ Suspension
☐ Termination
☐ Referral for criminal prosecution (in severe cases)

15.2 Regulatory Penalties

AML violations can result in:

☐ Civil money penalties
☐ Criminal prosecution
☐ Regulatory enforcement actions
☐ Reputational damage
☐ Loss of licenses

SECTION 16: POLICY REVIEW AND APPROVAL

16.1 Annual Review

This policy shall be reviewed and updated at least annually by:

☐ AML Compliance Officer
☐ Legal/Compliance Department
☐ Senior Management
☐ Board of Directors (approval)

16.2 Approval

This Anti-Money Laundering Policy is hereby approved:

______________________________________
AML Compliance Officer Signature

[________________________________]
Name (Print)

Date: [__/__/____]

______________________________________
Chief Executive Officer Signature

[________________________________]
Name (Print)

Date: [__/__/____]

______________________________________
Board Chair/Director Signature

[________________________________]
Name (Print)

Date: [__/__/____]

SOURCES AND REFERENCES

• FinCEN BSA/AML Resources: https://www.fincen.gov/resources/statutes-and-regulations/bank-secrecy-act
• FFIEC BSA/AML Examination Manual: https://bsaaml.ffiec.gov/manual
• FINRA Rule 3310: https://www.finra.org/rules-guidance/rulebooks/finra-rules/3310
• OFAC Sanctions Programs: https://ofac.treasury.gov/sanctions-programs-and-country-information
• FinCEN SAR FAQs (October 2025): https://www.fincen.gov/resources/frequently-asked-questions-regarding-fincen-suspicious-activity-report-sar

This template is provided for informational purposes only and does not constitute legal advice. AML requirements vary by institution type and are subject to change. Consult with qualified AML professionals and legal counsel before implementing any AML program.