US agencies have issued a joint statement reminding banks 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.
Consequently, they say banks should adhere to a risk-based approach to assessing customer relationships and conducting customer due diligence (CDD) according to the statement issued on 6 July by 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.
While the statement does not alter existing Bank Secrecy Act/Anti-Money Laundering legal or regulatory requirements, the agencies say banks must adopt appropriate risk-based procedures for conducting ongoing CDD.
These procedures should enable banks to understand the nature and purpose of customer relationships for the purpose of developing a customer risk profile; conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information.
Individual customer scrutiny
The agencies point out that 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.
Access to finance
The statement does not establish new supervisory expectations but does express the agencies’ concerns that customers engaged in lawful activities should have access to financial services.
In other words, banks should not deny access to finance for any specific type of customer, because not all customers of a particular type automatically represent a uniformly higher risk of money laundering, terrorist financing, or other illicit financial activity the statement concludes.
The US agencies’ joint statement, Risk-Based Approach to Assessing Customer Relationships and Conducting Customer Due Diligence, can be found here.
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