By John Zasada, JD, CAMS – Shareholder, Financial Institutions Group

On July 6, 2022, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the Financial Crimes Enforcement Network (FinCEN), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC) (collectively, the agencies) issued a joint statement on the need to provide a risk-based approach to customer (member) relationships and conducting customer due diligence (CDD) for Bank Secrecy Act (BSA) purposes. Although the statement does not change existing BSA requirements, it does remind financial institutions of the need to apply a risk-based approach to the regulation. No customer type presents a single level of uniform risk, or a particular risk profile related to money laundering, terrorist financing, or other illicit financial activity. Not all customers of a particular type automatically represent a uniformly higher risk of money laundering, terrorist financing or other illicit financial activity. As a general matter, the agencies do not direct banks to open, close or maintain specific accounts.

The statement applies to all customer types referenced in the Federal Financial Institutions Examination Council (FFIEC) Bank Secrecy Act/Anti-Money Laundering Examination Manual, including, for example:

  • Independent automated teller machine owners or operators
  • Non-resident aliens and foreign individuals
  • Charities and non-profit organizations
  • Professional service providers
  • Cash intensive businesses
  • Non-bank financial institutions
  • Customers the bank considers politically exposed persons

The manual is not intended to suggest those characteristics represent a higher money laundering, terrorist financing or illicit finance risk. It is ultimately each financial institution’s decision to provide or maintain financial services to any customer. If you have questions about the statement, contact Doeren Mayhew’s regulatory compliance specialists today.