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

On June 22, 2022, the Financial Crimes Enforcement Network (FinCEN) issued a statement clarifying how to conduct customer due diligence on independent ATM owners and operators. FinCEN felt the statement was necessary because some independent ATM owners and operators have encountered difficulties in obtaining and retaining banking services.

An independent ATM operator is an individual or an entity that is in the business of owning, leasing, managing or otherwise controlling access to the interior of an ATM, including its internal cash vault.  FinCEN states not all independent ATM owner or operator customers pose the same level of money laundering, terrorist financing or other illicit financial activity risk, and not all of them are automatically higher risk. Also, if banks (and credit unions) comply with the Bank Secrecy Act/Anti-Money Laundering (BSA/AML) requirements and appropriately manage risks, they are not prohibited or discouraged from providing services to independent ATM owners and operators.

Financial institutions must apply a risk-based approach to customer due diligence (CDD) in developing the risk profiles of their customers or members, including independent ATM owners or operators, and are required to establish and maintain written procedures reasonably designed to identify and verify beneficial owners of legal entity customers. The CDD rule does not require financial institutions to conduct additional due diligence or to institute due diligence processes unique to independent ATM owner or operator customers. The statement suggests that financial institutions collect the following information for independent ATM owners and operators:

  • Organizational structure, including key principals and management.
  • Information pertaining to the operating policies, procedures and internal controls of the ATM owner or operator.
  • ATM currency servicing arrangements, contracts and responsibilities (e.g., cash vault services, third-party providers and self-service).
  • Information regarding the source of funds if the bank account is not used to replenish the ATM. Sources of cash may include proceeds generated by the core retail business of the owner, proceeds from a loan or revolving credit line or cash originating from an account maintained at another bank.
  • Location where the independent ATM owner or operator customer is organized, and where they maintain their places of business, including locations of owned or operated ATMs.
  • Description of expected and actual ATM activity levels, including currency transactions.
  • Information to better understand whether ATM operations are generally ancillary to other retail operations or the primary business of the independent ATM owner or operator customer.

If you have questions about how this statement may impact your financial institution, contact Doeren Mayhew’s regulatory compliance specialists today.