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AML/CFT AML Training Customer Due Diligence Fraud Prevention Financial Elder Abuse

Know your customer: Tips for front-line staff to support CDD compliance

Tiffany McLain, CAMS
Cara Lemley, CAMS
July 22, 2022
Read Time: 0 min

Teaching branch staff these KYC tips can aid CDD compliance

BSA Officers can help tellers and other branch staff learn how to ask questions that both foster relationships and support CDD compliance.  

You might also like this resource, "Customer due diligence checklist."

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Takeaway 1

Front-line teams are the eyes and ears of the bank or credit union and can support Customer Due Diligence (CDD) requirements.

Takeaway 2

On top of mandatory BSA/AML training, staff can benefit from learning how to ask difficult questions regarding customer or member activity.

Takeaway 3

Encourage staff to have conversations with customers or members routinely, to analyze individual circumstances, and to trust their instincts. 

Eyes and ears of institutions

Why training front-line staff supports CDD.

Front-line teams are the eyes and ears of the bank or credit union. They interact with customers or members daily and are the first line of defense against attempts to compromise them or the institution. They can help educate about the dangers of fraud through conversation and customer/member education events, and the relationships they develop can be vital to investigations of suspicious activity. These relationships help your bank or credit union identify customers’ business needs and give them the personalized experience often lacking in today's digital "do-it-yourself" world.

But they can also help your BSA team by supporting Know Your Customer (KYC) and Customer Due Diligence  (CDD) compliance. 

Ongoing monitoring

Knowing customers to ID suspicious activity.

All front-line employees are required to take annual BSA/AML training.

In addition to this mandatory training, employees will benefit from learning how to ask difficult questions regarding customer or member activity. The ability of tellers, lenders, and other branch staff to use their knowledge and these soft, "people" skills will support BSA. It equips them for the ongoing monitoring that might identify and report suspicious transactions, which is an essential component of CDD.

As the BSA/AML Examination Manual section on CDD compliance notes,

Performing an appropriate level of ongoing due diligence that is commensurate with the
customer’s risk profile is especially critical in understanding the customer’s transactions in
order to assist the bank in determining when transactions are potentially suspicious. This
determination is necessary for a suspicious activity monitoring system that helps to mitigate the bank’s compliance and money laundering risks.

 

Encourage conversations

CDD tips: Cash thresholds and examples.

Below are seven tips for BSA best practices for front-line staff that will foster, not hinder, customer/member relationships while providing ongoing due diligence and supporting CDD compliance requirements. 

Advise tellers on thresholds.

Advise tellers of the bank’s quantitative threshold on cash activity that should prompt a conversation with the customer or member. Tellers may feel a discussion is warranted even with transactions below this threshold or may not be required once they get to know the person and their business. But setting guidelines for when to ask questions reminds the front-line employees to pause and evaluate each unique situation.

Encourage conversations.

Encourage conversation with the customer or member. Many customers coming into the branch are elderly and love to come in specifically to chat with employees. You will want to take the opportunity to get to know them. They are a prime target for many scams, and these conversations could save them thousands of dollars.

Offer examples.

Provide sample questions to start a conversation. Tellers should avoid statements such as, "I'm required to ask what this money is for/from." For many people, finances are a deeply personal business, and inquiries such as these can put someone on the defensive. Instead, phrase the question in a way that's conversational and non-threatening. A straightforward approach is to make a wild guess as to what the funds are for – the crazier, the better. People will often laugh at this guess and correct it out of habit, voluntarily offering you the necessary information. For example:
  • Wow, this is the going price of a unicorn. You aren't buying a unicorn, are you?
  • The lottery jackpot is up to 3 million – did you win?
  • It's vacation season. Any fun travel plans coming up?

Analyze the individual situation.

The customer or member may not give any details. Remember, no answer is also an answer. When no explanation is given, analyze the individual situation and consider if a customer or member could be a scam victim if this is a cash withdrawal. It might be time to remind them that if anyone is directing them to lie to the bank or credit union, they may be involved in a scam, and if they do not feel comfortable talking to the institution, they should reach out to their local law enforcement before sending funds. A sign or brochure about scams at the teller window may be helpful.

Remind the front-line about some of the frequent explanations when someone is involved in a scam, such as the money is needed for a family emergency or constant home repairs. While asking these questions helps the BSA team when unusual transactions come up in alerts, it often helps the customer or member when they are unknowingly involved in fraud. 

Asking questions can even help point out offers the customer or member could take advantage of. For example, if you find out your customer or member is taking out unusual amounts of cash for repairs to their car, maybe it's a good time to remind them about your rates on new car loans.

Tip for BSA Officer: Keep track of important CDD compliance information in one central location with Due Diligence Manager. 

Encourage staff to trust their gut.

There could be times when a customer/member situation doesn't feel right, but a more senior employee says it doesn't need to be reported. Encourage employees to always trust their gut and report. Let the BSA and Fraud teams decide if further action is necessary. Management should never tell an employee not to report, and anyone who does so should be included in the description of suspicious activity so that BSA can identify gaps in training or investigate any employee involvement in the activity.

Don’t be a stranger.

BSA is always busy, but if time allows, scheduling a meet and greet can go a long way to building trust with the front line. Employees may feel more comfortable opening those lines of communication once they know the faces of the team, rather than being intimidated by an unfamiliar department hidden away in a corporate tower. Create a flyer introducing the BSA team if you are a multiple branch financial institution where in-person visits are not feasible. This can include suspicious activity reporting options, a description of what BSA does, contact information, and current tips, trends, or cases that are relevant. 

We've created a sample flyer for financial institutions to edit as needed, or your BSA team can create their own. Download the CDD compliance support sample flyer for front-line staff.

Encourage communication.

Finally, encourage your BSA team to respond to emails and reports of suspicious activity from the front line. An acknowledgment and a thank you can go a long way toward motivating employees to continue reporting in the future. Communication is the name of the game when it comes to knowing your customer and supporting KYC and CDD compliance.

Learn best practices for Due Diligence in an increasingly digital world during this webinar, "Strategic Due Diligence on Higher Risk Customers."

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About the Authors

Tiffany McLain, CAMS

Senior Financial Crimes Investigator
Tiffany McLain has nearly two decades of banking experience. She started in operations and worked her way to BSA/AML where she has been since 2007. Her responsibilities have included CTRs, alert triage and investigations, SAR writing, training (staff & board), risk assessment and policy writing, system performance and adjustments, quality

Full Bio

Cara Lemley, CAMS

Financial Crime Investigator
Cara Lemley has been working as a Financial Crime Investigator at Abrigo since 2021 but began her career in the banking industry in 2015. She first worked the front lines in retail banking but quickly found her calling in BSA/AML. Her responsibilities have included managing alert triage, SAR writing and

Full Bio

About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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