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Financial Institution Letter

Joint Statement on the Risk-Based Approach to Assessing Customer Relationships and Conducting Customer Due Diligence

July 6, 2022  |  FIL-28-2022

Summary:

The FDIC, the Board of Governors of the Federal Reserve System, the Financial Crimes Enforcement Network, the National Credit Union Administration, and the Office of the Comptroller of the Currency (collectively, the Agencies), are issuing a joint statement to remind banks of the risk-based approach to assessing customer relationships and conducting customer due diligence (CDD).

The joint statement is available on the FDIC’s public website.

Statement of Applicability: The contents of, and material referenced in, this FIL apply to all FDIC-supervised financial institutions.

Highlights:

  • The Agencies 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 (ML), terrorist financing (TF), or other illicit financial activity.
  • Customer relationships present varying levels of ML, TF, and other illicit financial activity risks and the potential risk to a bank depends on the presence or absence of numerous factors, including facts and circumstances specific to the customer relationship. Banks must apply a risk-based approach to CDD when developing the risk profiles of their customers.
  • Banks that operate in compliance with applicable Bank Secrecy Act/anti-money laundering (BSA/AML) legal and regulatory requirements, and effectively manage and mitigate risks related to the unique characteristics of customer relationships, are neither prohibited nor discouraged from providing banking services to customers of any specific class or type.
  • The Agencies do not direct banks to open, close, or maintain specific accounts as a general matter. The Agencies continue to encourage banks to manage customer relationships and mitigate risks based on customer relationships, rather than decline to provide banking services to entire categories of customers.
  • This statement applies to all customer types referenced in the Federal Financial Institutions Examination Council (FFIEC) BSA/AML Examination Manual as well as those customer types not specifically addressed in this manual. The FFIEC BSA/AML Examination Manual, including sections on certain customer types, provides guidance to examiners for carrying out BSA/AML examinations and assessing a bank’s compliance with the BSA; it does not establish requirements for banks. Further, the inclusion of sections on specific customer types in this manual is not intended to signal that certain customer types should be considered uniformly higher risk.

Related Topic:

Bank Secrecy Act

Related Resource:

FFIEC BSA/AML Examination Manual