Board of Governors of the Federal Reserve System

Federal Deposit Insurance Corporation

Financial Crimes Enforcement Network

National Credit Union Administration

Office of the Comptroller of the Currency

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

Conducting Customer Due Diligence

July 6, 2022

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The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance

Corporation, the Financial Crimes Enforcement Network, the National Credit Union

Administration, and the Office of the Comptroller of the Currency (collectively, the Agencies),

are issuing this joint statement to remind banks [Footnote 1

- Under the Bank Secrecy Act, the term “bank” is defined in 31 CFR 1010.100(d) and includes each agent, agency,

branch, or office within the United States of banks, savings associations, credit unions, and foreign banks. End of Footnote 1.]

of the risk-based approach to assessing customer

relationships and conducting customer due diligence (CDD). This statement does not alter

existing Bank Secrecy Act/Anti-Money Laundering (BSA/AML) legal or regulatory

requirements, nor does it establish new supervisory expectations.

The Agencies recognize that it is important for customers engaged in lawful activities to have

access to financial services. Therefore, 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, 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. [Footnote 2

- 31 CFR 1020.210(a)(2)(v). End of Footnote 2.]

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. [Footnote 3

- Ibid. End of Footnote 3.]

Customer relationships present varying levels ofmoney laundering, terrorist financing, and other

illicit financial activity risks. The potential risk to a bank depends on the presence or absence of

numerous factors, including facts and circumstances specific to the customer relationship. Not

all customers of a particular type automatically represent a uniformly higher risk ofmoney

laundering, terrorist financing, or other illicit financial activity.

Banks that operate in compliance with applicable BSA/AML legal and regulatory requirements,

and effectively manage and mitigate risks related to the unique characteristics of customer
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relationships, are neither prohibited nor discouraged from providing banking services to

customers of any specific class or type. As a general matter, the Agencies do not direct banks to

open, close, or maintain specific accounts. 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. [Footnote 4

- Joint Statement on the Risk-FocusedApproach to BSA/AML Supervision, issued by the Board of Governors ofthe

Federal Reserve System, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network,

the National Credit Union Administration, and the Office ofthe Comptroller ofthe Currency, July 22, 2019. End of Footnote 4.]

In addition, the Agencies recognize that banks choose whether to enter into or maintain business

relationships based on their business objectives and other relevant factors, such as the products

and services sought by the customer, the geographic locations where the customer will conduct

or transact business, and banks' ability to manage risks effectively. [Footnote 5

- This statement does not require banks to cease or modify existing risk management practices ifthe bank considers

them necessary to effectively manage risk. End of Footnote 5.]

This statement addresses the Agencies' perspective on assessing customer relationships as well

as CDD requirements. It applies to all customer types referenced in the Federal Financial

Institutions Examination Council (FFIEC) Bank Secrecy Act/Anti-Money Laundering

Examination Manual,[Footnote 6

- https://bsaaml.ffiec.gov/manual. End of Foot not e6.]

including, for example, independent automated teller machine owners or

operators, [Footnote 7

- See FinCEN's Statement on Bank Secrecy Act Due Diligence for Independent ATM Owners or Operators (June

22, 2022). End of Footnote 7.]

nonresident aliens and foreign individuals, charities and nonprofit organizations,

professional service providers, cash intensive businesses, nonbank financial institutions, and

customers the bank considers politically exposed persons. This statement also applies to any

customer type not specifically addressed in the FFIEC BSA/AML Examination 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 provides background information and procedures for 

examiners related to risks associated with money laundering and terrorist financing; inclusion of

these sections is not intended to signal that certain customer types should be considered

uniformly higher risk.