Five Federal Agencies Release Joint Statement on Customer Due Diligence Approach – Money Laundering


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On July 6, five federal agencies – the Federal Reserve Board of Governors (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”), the Financial Crimes Enforcement Network (“FinCEN”), the National Credit Union Administration ( “NCUA”), and Office of the Comptroller of the Currency (“OCC”), collectively, the “Agencies” − issued a joint statement on the risk-based approach to assessing customer relationships and conducting due diligence reasonable towards customers to “remind [banks, thrifts, credit unions and
other covered institutions] risk-based approach to assessing customer relationships and conducting customer due diligence (CDD).”

In the Statement, the Agencies reinforced their view that no particular type of customer should be considered to present a single uniform level of risk for money laundering, terrorist financing or other illicit financing. Thus, the Agencies reiterated that they “continue to encourage banks to manage customer relationships and mitigate risk based on customer relationships, rather than refusing to provide banking services to entire classes of customers.”

The Agencies also reiterated that appropriate risk-based CDD procedures should “enable banks to: (i) understand the nature and purpose of customer relationships with the aim of developing a client risk profile, and (ii) to perform ongoing monitoring to identify and report transactions and, on a risk basis, to maintain and update client information.”

The agencies also noted that the discussion of particular customer types in the FFIEC BSA/AML Examination Handbook should not be interpreted as an indication that banks should avoid broad categories of customers or view them as uniformly risky. higher, but rather as guidance for examiners conducting assessments of a bank’s compliance with the Bank Secrecy Act.

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