Issued July 6, 2022
3-1880
The Board of Governors of the Federal Reserve System,
the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement
Network, the National Credit Union Administration, and the Office
of the Comptroller of the Currency (collectively, the agencies), are
issuing this joint statement to remind banks
1 of the risk-based approach to assessing customer relationships
and conducting customer due diligence (CDD). This statement does not
alter existing Bank Secrecy Act/anti-money laundering (BSA/AML) legal
or regulatory requirements, nor does it establish new supervisory
expectations.
The agencies recognize that it is important for customers
engaged in lawful activities to have access to financial services.
Therefore, the agencies are reinforcing a longstanding position that
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.
Banks must apply a risk-based approach to CDD, including
when developing the risk profiles of their customers.
2 More specifically, banks must adopt appropriate risk-based procedures
for conducting ongoing CDD that, among other things, enable banks
to: (i) understand the nature and purpose of customer relationships
for the purpose of developing a customer risk profile, and (ii) conduct
ongoing monitoring to identify and report suspicious transactions
and, on a risk basis, to maintain and update customer information.
3
Customer relationships present varying
levels of money laundering, terrorist financing, and other illicit
financial activity risks. The potential risk to a bank depends on
the presence or absence of numerous factors, including facts and circumstances
specific to the customer relationship. Not all customers of a particular
type automatically represent a uniformly higher risk of money laundering,
terrorist financing, or other illicit financial activity.
Banks that operate in compliance
with applicable BSA/AML legal and regulatory requirements, and effectively
manage and mitigate risks related to the unique characteristics of
customer relationships, are neither prohibited nor discouraged from
providing banking services to customers of any specific class or type.
As a general matter, the agencies do not direct banks to open, close,
or maintain specific accounts. The agencies continue to encourage
banks to manage customer relationships and mitigate risks based on
customer relationships, rather than decline to provide banking services
to entire categories of customers.
4
In addition, the agencies recognize that banks choose
whether to enter into or maintain business relationships based on
their business objectives and other relevant factors, such as the
products and services sought by the customer, the geographic locations
where the customer will conduct or transact business, and banks’
ability to manage risks effectively.
5
This statement addresses the agencies’ perspective
on assessing customer relationships as well as CDD requirements. It
applies to all customer types referenced in the
Federal Financial
Institutions Examination Council (FFIEC) Bank Secrecy Act/Anti-Money
Laundering Examination Manual,
6 including, for example, independent automated teller machine
owners or operators,
7 nonresident
aliens
and foreign individuals, charities and nonprofit organizations,
professional service providers, cash intensive businesses, nonbank
financial institutions, and customers the bank considers politically
exposed persons. This statement also applies to any customer type
not specifically addressed in the
FFIEC BSA/AML Examination Manual.
The FFIEC BSA/AML Examination Manual, including
sections on certain customer types, provides guidance to examiners
for carrying out BSA/AML examinations and assessing a bank’s
compliance with the BSA; it does not establish requirements for banks.
Further, the inclusion of sections on specific customer types provides
background information and procedures for examiners related to risks
associated with money laundering and terrorist financing; inclusion
of these sections is not intended to signal that certain customer
types should be considered uniformly higher risk.
Joint statement of July 6, 2022 (SR-22-5).