The Federal Reserve Board of Governors, the Federal Deposit Insurance Corp. (FDIC), the Financial Crimes Enforcement Network (FinCEN), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC) issued a joint statement reminding banks of the risk-based approach to assessing customer relationships and conducting customer due diligence (CDD).
The agencies are not creating new legal or regulatory requirements, nor are they altering existing Bank Secrecy Act/Anti-Money Laundering (BSA/AML) regulations. They 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,” the statement read. “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.”
According to the statement, banks in compliance with applicable BSA/AML legal and regulatory requirements, and effectively manage and mitigate risks, are neither prohibited nor discouraged from providing banking services to customers of any specific class or type. The agencies continue to encourage banks to manage customer relationships and mitigate risks, rather than decline to provide services to entire types of customers.
The agencies maintain banks choose whether to enter or maintain business relations based on individual business objectives and other relevant factors.