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Bank Secrecy Act: Customer Identification Program Rule Exemption for Insurance Premium Finance Loans

Bank Secrecy Act
October 9, 2020

Summary:

The FDIC, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the National Credit Union Administration, collectively the federal banking agencies (FBAs), with the concurrence of the Financial Crimes Enforcement Network (FinCEN), grant an exemption from the requirements of the customer identification program (CIP) rules for loans extended by banks and their subsidiaries to all customers to facilitate purchases of property and casualty insurance policies.

A copy of the Order Granting the Exemption can be found on the FDIC’s website.

Statement of Applicability to Institutions with Total Assets Under $1 Billion: This Financial Institution Letter (FIL) applies to all FDIC-supervised banks and savings associations, including community banks.

Highlights:

  • The appropriate FBA, with the concurrence of FinCEN, may by order or regulation, exempt any bank or type of account from the requirements of the CIP rules after consideration of whether the proposed exemption is consistent with the purposes of the Bank Secrecy Act (BSA) and with safe and sound banking practices.
  • FinCEN, the administrator of the BSA, has stated that insurance premium finance loans present a low risk of money laundering because of the purpose for which the loans are extended and limitations on the ability of a customer to use such funds for any other purpose.
  • Based on FinCEN’s determination, the FDIC and the other FBAs have issued an order granting an exemption from the requirements of the CIP rules for loans extended by banks and their subsidiaries to all customers to facilitate the purchase of property and casualty insurance policies.
  • Banks engaging in insurance premium finance lending must continue to comply with all other regulatory requirements implementing the BSA, including the requirement to file suspicious activity reports.
  • The order supersedes the September 27, 2018 order granting an exemption from the requirements of the CIP rules for loans extended by banks and their subsidiaries to commercial customers to facilitate the purchase of property and casualty insurance policies.

Distribution:

FDIC-Supervised Institutions

Suggested Routing:

Chief Executive Officer
BSA Compliance Officer

Additional Related Topics:

  • Anti-Money Laundering
  • Counter-Terrorist Financing
Attachment(s)
Related Topics
Bank Secrecy Act

Last Updated: October 9, 2020