BSA customer ID rule exemption set for FIs’ loans to businesses to buy property and casualty insurance

An exemption from Bank Secrecy Act (BSA) customer identification program rules for loans made for the purchase of property and casualty insurance was approved by federal regulators Friday, effective as of Sept. 27, 2018.

The order was issued jointly by the Office of the Comptroller of the Currency (OCC), Federal Reserve Board, Federal Deposit Insurance Corp. (FDIC), and National Credit Union Administration (NCUA), and with the concurrence of the Treasury Financial Crimes Enforcement Network (FinCEN).

The exemption applies to loans extended by federally supervised banks and credit unions, and their subsidiaries, to facilitate commercial customers’ or members’ purchase of property and casualty insurance policies.

“FinCEN agrees that the structural characteristics of premium finance lending, as described, present a low risk for money laundering activity or terrorist financing,” the order states. “In addition, FinCEN has already made the independent determination that these types of accounts present a low risk of money laundering, both because of the purpose for which such accounts are established and because the characteristics of these accounts that make them poor vehicles for money laundering.”

NCUA announced that the exemption for credit unions applies under Section 748.2 of the agency’s rules and regulations, for certain property and casualty finance contracts provided by credit unions to small businesses.

Joint agency order

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