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, the federal banking and credit union agencies, along with the Treasury’s top financial law enforcement unit, jointly said in a statement issued Wednesday.
“The agencies recognize that it is important for customers engaged in lawful activities to have access to financial services,” the bulletin stated. The statement, the agencies said, clarifies a “longstanding position” by the regulators that banks and credit unions must take a risk-based approach to assessing individual customer relationships and conducting customer due diligence.
The statement was issued jointly by the Office of the Comptroller of the Currency (OCC), the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC), the National Credit Union Administration (NCUA) and the Financial Crimes Enforcement Network (FinCEN).
More specifically, the statement noted that banks and credit unions must adopt risk-based procedures for conducting ongoing customer due diligence (CDD) that enable them to:
- understand the nature and purpose of customer relationships in the development of a customer risk profile, and
- conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information.
In its cover note accompanying the statement, NCUA stated that regulations established in the Bank Secrecy Act (BSA) establish a risk-based approach to assessing customer relationships and conducting customer due diligence. “The NCUA expects credit unions to assess the risks posed by each customer individually. Further, the NCUA advises against refusing service or discontinuing service to an entire class of customers based on perceived risk,” the agency said.
Credit unions that comply with BSA and anti-money laundering (AML) requirements and have an effective customer due diligence program in place are well-positioned to manage customer relationships and risks appropriately, based on each individual customer relationship, NCUA stated.