Enhanced Due Diligence Report #1 Year Completed 08/2016 Completed By: John Smith Business Name / Account Owner: AAAA Corporation Summary: EDD was conducted on business checking account number XXXXXXXXXX01, owned by AAAA Corporation, opened on 02/22/2008, in accordance with the BSA Policies and Procedures for High Risk Accounts at XYZ Bank. CIF Analysis: AAAA Corporation specializes in Automobile Warranty Services, Customer Service and business processing operations for the Automobile Industry according to Internet research via Company's Website. AAAA Corporation maintains ten business DDA account(s) with XYZ BANK, as listed below. For the purpose of this review, account number(s) XXXXXXXXX02, XXXXXXXX03, XXXXXXXX04, XXXXXXXX05, XXXXXXXX06, XXXXXXXX07, XXXXXXXX08, XXXXXXXX09, XXXXXXXX10, and XXXXXXXX11 have been included in this review. CIF Analysis Chart (copy/paste from Excel) CIF Analysis (TIN Number: 76-XXXXX12)

Account Number	Account Type	Open Date	Purpose of Account	Average Balance	Risk Score (Points)	Number of SAR Filings	Date of Last SAR	SAR Filing Reason(s)
XXXXXXXX01	DDA/YHC	2/22/2008	Money Market	$56,164,253.60	39	n/a	n/a	n/a
XXXXXXXXX02	DDA/BUS	2/27/2008	Service Contracts	$508,229.46	27	n/a	n/a	n/a
XXXXXXXX03	DDA/YHC	2/27/2008	Claims Checks	$172,009.90	9	n/a	n/a	n/a
XXXXXXXX04	DDA/BUS	2/22/2008	Operating	$942,863.05	30	n/a	n/a	n/a
XXXXXXXX05	DDA/BUS	2/22/2008	Payroll	$48,871.83	27	n/a	n/a	n/a
XXXXXXXX06	DDA/BUS	2/22/2008	MTM Claims	$32,838.47	9	n/a	n/a	n/a
XXXXXXXX07	DDA/BUS	2/22/2008	MTM Credit Cards	$56,158.94	27	n/a	n/a	n/a
XXXXXXXX08	DDA/BUS	2/22/2008	Service Contracts	$3,463,993.02	12	n/a	n/a	n/a
XXXXXXXX09	DDA/BUS	2/22/2008	GAP	$499,192.09	9	n/a	n/a	n/a
XXXXXXXX10	DDA/BUS	7/24/2008	GAP ALL STATE	$2,013,779.28	9	n/a	n/a	n/a
XXXXXXXX11	DDA/YHC	4/23/2012	ANICO GAP Money Market	$1,394,715.07	9	n/a	n/a	n/a
TOTAL CIF AVERAGE BALANCE	$65,296,904.71

Enhanced Due Diligence Report #1 Conclusion: AAAA Corporation's primary source of credit activity is commensurate with nature of business information documented at account opening. Review of credit and debit activity during the timeframe reviewed, as well as historically, was consistent with information and activity referenced to review and aligns with the average balance(s) for the account(s) reviewed accordingly. The business is located at XXXX Main Street, Any City, Any State, USA. Business specializes in Automobile Warranty Services, Customer Service and business processing operations for the Automobile Industry.

Primary source of Credit activity for business resulted from Book Transfers conducted between account. Book Transfer is an XYZ BANK Treasury Management product that allows businesses to transfer funds between internal XYZ BANK accounts. Other Credits include check deposits via Remote and Branch. Checks were received for deposit from various Automobile Dealerships for service. Incoming Wires were received by United Service Protection Corp. ACH Credits resulted from Allstate Insurance and Auto Sr., which are reporting in the correct name. Funds were disbursed via Book Transfers, Outgoing Wires, Checks and ACH Debits for normal business operations and expenses. Book Transfers were conducted between accounts as needed. Outgoing wires were issued to USPC. Checks were issued to various Automobile Dealerships such as EFG Honda, HIJ Nissan of Anchorage, John Doe Nissan, CCC Chevrolet, MMM KIA, ALL Motors, VVV Ford LTD, Lone Man RV, Mark Jay Dodge, LLLL Chevrolet and other dealerships relevant to the nature of the business. Other checks issued for business expenses such as XXXXX Warranty Trust, BBBBY Specialists, Matt's Staffing, OOO Dealer Exchange, GG Management, and other businesses relevant to the nature of the business as well as individual for what appears to be payroll related. ACH Debits consisted of ADP Payroll Fees, 401K, Taxes and Garnishments. Other notable activity were Deposited items returned, which were included in the analysis chart due to the dollar amount reflecting on the debit side. Activity reviewed does align with the nature of the business and does not appear unusual or suspicious nor does it appear to have been conducted in an unusual or suspicious manner at this time. This review does not indicate any suspicious or unusual activity; furthermore, XYZ BANK does not believe the activity was conducted in a suspicious manner. XYZ BANK does not believe this review warrants an immediate SAR filing nor account closure at this time; however, future SAR filings may be warranted should activity change or deviate from what is noted within this review. The Risk Rating of High will remain as such while XYZ BANK continues to monitor this customer relationship accordingly. Enhanced Due Diligence Report #2 TRL LLC

Annual Review: YEAR TWO EDD Annual Review Cleared: An annual EDD was conducted during 06/2015 for business checking account numbers XXXX1, XXXX2, XXXX3, XXXX4, XXXX5 and XXXX6, owned by TRL LLC in accordance with the BSA Policies and Procedures for High Risk Accounts at XYZ Bank; the RBRR score for account XXXX1 was M-30 at the time of the annual review. The RBRR score for account XXXX1 was H-36 as of this second annual review. The RBRR score for account XXXX7 was H-69 at the time of the annual review. The RBRR score for account XXXX7 was H-78 as of this second annual review. The RBRR score for account XXXX3 was M-33 at the time of the annual review. The RBRR score for account XXXX3 was H-42 as of this second annual review. The RBRR score for account XXXX4 was M-30 at the time of the annual review. The RBRR score for account XXXX4 was H-42 as of this second annual review. The RBRR score for account XXXX5 was M-30 at the time of the annual review. The RBRR score for account XXXX5 was H-39 as of this second annual review. The RBRR score for account XXXX6 was H-69 at the time of the annual review. The RBRR score for account XXXX6 was H-78 as of this second annual review. DDA(s) XXXX1, XXXX2, XXXX3, XXXX4, XXXX5 and XXXX6 are the only accounts reporting under TIN 45-XXXXXX at this time and as such, were reviewed accordingly. Activity reviewed for the purpose of this EDD is inclusive of the following DDA(s): XXXX1, XXXX2, XXXX3, XXXX4, XXXX5 and XXXX6. A review of credit and debit activity from 04/01/2015 to 03/31/2016 remains consistent with information and activity referenced to complete the initial review and aligns with the average balance for the account reviewed accordingly. The primary source of credit activity is commensurate with nature of business/employment information documented at account opening, as well as the information from the initial and annual EDD reviews. All activity remains consistent with nature of business.

Business operates three grocery stores, which offer Money Services via Money Gram and Western Union. Activity reviewed aligns with Nature of the Business as well as Annual EDD Review at this time. This review does not indicate any suspicious or unusual activity; furthermore, XZY Bank does not believe the activity was conducted in a suspicious manner. XYZ Bank does not believe this review warrants an immediate SAR filing, as such no SAR will be filed at this time; however, future SAR filings may be warranted and should be filed accordingly. Furthermore, this review does not warrant account closure at this time. The average balance maintained in account number XXXX1 is approximately $7,089.96 as of this review. The average balance maintained in account number XXXX7 is approximately $42,991.08 as of this review. The average balance maintained in account number XXXX3 is approximately $6,401.65as of this review. The average balance maintained in account number XXXX4 is approximately $59,406.32 as of this review. The average balance maintained in account number XXXX5 is approximately $30,673.97 as of this review. The average balance maintained in account number XXXX6 is approximately $14,749.18 as of this review.

Enhanced Due Diligence Report #2 CIF Analysis (TIN Number: 45-XXXXXXX)

Account Number	Account Type	Open Date	Purpose of Account/ Relationship	Average Balance	Risk Score (Points)	Number of SAR Filings	Date of Last SAR	SAR Filing Reason(s)
XXXX1	DDA/BSC	3/19/2005	Operating	$7,089.96	30	n/a	n/a	n/a
XXXX7	DDA/BSC	2/14/2005	Operating	$42,991.08	69	n/a	n/a	n/a
XXXX3	DDA/BSC	4/7/2011	Operating	$6,401.65	30	n/a	n/a	n/a
XXXX4	DDA/BSC	4/4/2011	Operating	$59,406.32	30	n/a	n/a	n/a
XXXX5	DDA/BSC	9/6/2011	Operating	$30,673.97	30	n/a	n/a	n/a
XXXX6	DDA/BSC	9/6/2011	Operating	$14,749.18	69	n/a	n/a	n/a
TOTAL CIF AVERAGE BALANCE	$161,312.16

Enhanced Due Diligence Report #3 RKS, Inc.

EDD Annual Review Cleared: An initial EDD was conducted during 8/2015 for business checking account number XXXXXXX1, owned by RKS, Inc., in accordance with the BSA Policies and Procedures for High Risk Accounts at XYZ Bank; the RBRR score for said account was High at the time of the initial review. The RBRR score for said account was High as of this annual review. A review of credit and debit activity from 07/2015 to 06/2016 remains consistent with information and activity referenced to complete the initial review and aligns with the average balance for the account reviewed accordingly. The primary source of credit activity is commensurate with nature of business documented at account opening, as well as the information from the initial EDD review. All activity remains consistent with nature of business. Credits consist primarily of cash deposits averaging $1,456,496 monthly, which appears to be from daily sales of business. CTRs are filed frequently for cash deposit activity. Debits consist primarily of ACH debits and cash received from change orders. ACH debits are for external transfers to operating accounts for RKS. Change orders average $41,161 monthly, and do not appear unusual or suspicious. Activity remains consistent with that referenced in the initial review, indicating that the customer maintains convenience accounts for cash deposits from daily sales at RKS farming equipment and agricultural supply stores located near XYZ BANK branches 229, 426, 465, and 477. Funds are primarily disbursed via ACH for external transfers to operating accounts for RKS. During EDD review it was noted that RKS, Inc., is not in good standing per the Delaware Secretary of State website. Exceptions for DDAs XXXXXXX2and XXXXXXX3 were generated 8/5/2016, and will be cancelled upon receiving valid business documentation for RK Shares Inc. This review does not indicate suspicious or unusual activity; furthermore, XYZ BANK does not believe the activity was conducted in a suspicious manner. XYZ BANK does not believe this review warrants a SAR filing; as such no SAR will be filed at this time. Furthermore, this review does not warrant account closure at this time. DDAs XXXXXXX4, XXXXXXX5, XXXXXXX6, XXXXXXX7, and XXXXXXX3 are also reporting under TIN 62-XXXXXXX and as such, were reviewed accordingly. Activity reviewed for the purpose of this EDD is inclusive of the following DDAs: XXXXXXX1, XXXXXXX4, XXXXXXX5, and XXXXXXX6. DDAs XXXXXXX2and XXXXXXX3 were opened 8/5/2016, which is after the activity referenced for this review.

Enhanced Due Diligence Report #3 The average balance maintained in account number XXXXXXX1 is approximately $31,545.84 as of this review. The average balance maintained in account number XXXXXXX4 is approximately $49,374.99 as of this review. The average balance maintained in account number XXXXXXX5 is approximately $39,451.75 as of this review. The average balance maintained in account number XXXXXXX6 is approximately $45,303.52 as of this review. The average balance maintained in account number XXXXXXX2is approximately $46,270.89 as of this review. The average balance maintained in account number XXXXXXX3 is approximately $49,124.97 as of this review. CIF Analysis (TIN Number: 62-XXXXXXX)

Account Number	Account Type	Open Date	Purpose of Account/ Relationship	Average Balance	Risk Score (Points)	Number of SAR Filings	Date of Last SAR	SAR Filing Reason(s)
XXXXXXX1	DDA	10/9/2013	Happy Town RK	$31,545.84	54	0	na	na
XXXXXXX4	DDA	10/14/2013	New Santa RK	$49,374.99	54	0	na	na
XXXXXXX5	DDA	10/15/2013	Shelbytown RK	$39,451.75	48	0	na	na
XXXXXXX6	DDA	2/6/2015	St. Region RK	$45,303.52	51	0	na	na
XXXXXXX2	DDA	8/5/2015	Zaneytown RK	$46,270.89	NEW	0	na	na
XXXXXXX3	DDA	8/5/2015	Cross Rivers RK	$49,124.97	NEW	0	na	na
TOTAL CIF AVERAGE BALANCE	$261,071.96

Enhanced Due Diligence Report #4 BILLY BOB'S LIQUOR Year Completed (Initial Review): 12/2013 Completed By: J Smith Year Completed (Annual Review): 9/2014 Year Completed (Annual Review): 8/2015 Year Completed (Annual Review): 4/2016 Business Name / Account Owner: Billy Bob's Liquor, Inc. Summary: EDD was conducted on business checking account numbers XXXXXX1, XXXXXX2, XXXXXX3, XXXXXX4, XXXXXX5, and XXXXXX6, owned by Billy Bob's Liquor, Inc., opened on 4/25/1983, 4/25/1983, 5/26/1992, 6/5/1995, 8/24/2005, and 11/5/1996, respectively, in accordance with the BSA Policies and Procedures for High Risk Accounts at XYZ Bank. CIF Analysis: Billy Bob's Liquor, Inc. specializes in liquor store operations and third party check cashing services according to account opening documentation. Billy Bob's Liquor, Inc. maintains six business DDA accounts with XYZ BANK, as listed below. For the purpose of this review, account numbers XXXXXX1, XXXXXX2, XXXXXX3, XXXXXX4, XXXXXX5, and XXXXXX6 have been included in this review. CIF Analysis (TIN Number: 76-XXXXXXX)

Account Number	Account Type	Open Date	Purpose of Account	Average Balance	Risk Score (Points)	Number of SAR Filings	Date of Last SAR	SAR Filing Reason(s)
XXXXXX1	DDA	4/25/1983	Check Cashing	$3,467.30	125	1	6/20/2014	Expired MSB Registration
XXXXXX2	DDA	4/25/1983	Lottery	$2,469.20	27	0	N/A	N/A
XXXXXX3	DDA	5/26/1992	Operating	$25,694.77	51	0	N/A	N/A
XXXXXX4	DDA	6/5/1995	Payroll	$57.86	24	0	N/A	N/A
XXXXXX5	DDA	8/24/2005	Payroll	$19,788.87	33	0	N/A	N/A
XXXXXX6	DDA	11/5/1996	Savings	$10,430.35	24	0	N/A	N/A
TOTAL CIF AVERAGE BALANCE	$61,908.35

Conclusion: Billy Bob's Liquor, Inc.'s primary source of credit activity is commensurate with nature of business information documented at account opening. Review of credit and debit activity during the timeframe reviewed, as well as historically, was consistent with information and activity referenced to review and aligns with the average balances for the accounts reviewed accordingly. The business is located at 1 Main Street, Any City, Anytown, USA. Enhanced Due Diligence Report #4 Conclusion Continued: The business customer's primary source of credit activity consists of checks accepted for deposit into DDA XXXXXX1 from various individuals as a result of Billy Bob's Liquor, Inc.'s check cashing services as well as checks from various businesses and individuals related to the sales generated by the liquor store which are deposited into the customer's operating account (DDA XXXXXX3). In addition to checks, ACH credits process from Bizmart, and BCDcartronics; both of which align with the nature of business and historical activity. The customers also deposited an average of approximately $39,000 in cash each month from 4/1/2015 to 3/31/2016; cash is an accepted form of payment and the cash volumes do not appear inordinate when compared to historical cash flows. Credits are distributed from DDAs XXXXXX1, XXXXXX3, XXXXXX5, and XXXXXX6 to DDAs XXXXXX2 and XXXXXX4 as needed to service payroll and lottery expenses. The funds were predominantly disbursed in cash received by the customers. During the timeframe under review the customers received an average of approximately $327,000 each month to service the business' check cashing services; the cash volumes remain consistent with information provided from previous EDD reviews as well as historical activity. ACH debits also cleared the accounts for Western Union, Bizmart, BCDcartronics, and the IRS; all of which align with typical activity for the business and do not appear suspicious or unusual. The remaining funds were chiefly disbursed through checks issued to various vendors and suppliers commensurate with the operations of a liquor store as well as other checks for payroll expenses. This review does not indicate any suspicious or unusual activity; furthermore, XYZ BANK does not believe the activity was conducted in a suspicious manner. XYZ BANK does not believe this review warrants a SAR filing nor account closure at this time; however, future SAR filings may be warranted should activity change or deviate from what is noted within this review. The Risk Rating of High will remain as such while XYZ BANK continues to monitor this customer relationship accordingly.

BACKGROUND. Customers that pose a high money laundering or terrorist financing risk, present increased exposure to the Bank and are classified as High Risk Accounts. To mitigate increased risks associated with high-risk customers, an Enhanced Due Diligence Review (herein referred to as EDD and Review) will be completed on all customers designated as such based on the Rules Based Risk Rating (RBRR) score within the Bank's Automated System ("BAS"), or through an escalation from another area of the Bank's BSA Department. In addition to the RBRR system, the Bank reviews High Risk Account activity for spikes or other unusual activity during the monthly review of High Risk Account Alerts, through the BAS's alert based monitoring system.

PURPOSE. The Bank may determine that a customer poses a higher risk based on the account activity, ownership structure, anticipated or actual volume and types of transactions. The EDD Review is designed to determine, with a high degree of certainty, that transaction activity of an identified high risk account(s) is commensurate with the anticipated and legitimate activity for the customer relationship, based on CIP and Customer Due Diligence information for business and consumer account customers. The Review appropriately documents the Bank's acknowledgement to maintain the identified high risk relationship; however, if the Review provides the Bank with reasonable belief that the noted account activity may be suspicious and/or illicit, or if any information obtained during the Review warrants a Suspicious Activity Report (SAR), the customer (and any other individual(s)) involved in the suspicious and/or illicit activity will be reported in a SAR. Furthermore, the Bank may determine account closure is necessary due to reasonable belief that the noted account activity may be suspicious and/or illicit.

OVERVIEW. For the purpose of the Bank's CIP and Customer Due Diligence, the following information should be obtained at account opening and then maintained throughout the banking relationship to further support the Enhanced Due Diligence monitoring:

• Purpose of account
• Source of funds and wealth
• Individuals with ownership or control over the account
• Occupation type
• Domicile
• Proximity of customer's residence or business
• Explanations for change in activity

Case

Bank XYZ has had five successful annual exams on BSA under its current policies and procedures. Those policies and procedures have been reviewed in detail each year by the examiners. The lead examiner from the regulatory agency has been the same person every time for all five exams.

Bank XYZ knows, however, that these policies and procedures must be regularly scrutinized with respect to meeting regulatory guidelines but also in strengthening the risk management profile of the organization.

BSA is and has been a "hot button" for regulators and banks have seen downgrades in their CRA ratings as a result of a poor BSA exam. This leads the management of bank XYZ to ask the compliance team to review of the Enhanced Due Diligence (EDD) procedures at the bank in particular to prepare for the coming exam.

Assignment:

Read the Bank's Procedures for Enhanced Due Diligence Accounts and the Examples of EDD reports. Write your recommendation to improve those procedures, if necessary, to strengthen the bank's high-risk reviews and better prepare for the examination. FYI, a new examiner to the bank will be conducting the exam. Thisexaminer comes straight from one of the top 5 banks in the country, those banks are many, many times larger than bankXYZ. Does that change your perspective or recommendation?