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BOARD OF GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

WASHINGTON, D.C. 20551 

DIVISION OF SUPERVISION

AND REGULATION

SR 22-5 

July 6, 2022 

TO THE OFFICER IN CHARGE OF SUPERVISION

 AT EACH FEDERAL RESERVE BANK

SUBJECT: Joint Statement on the Risk-Based Approach to Assessing Customer 

Relationships and Conducting Customer Due Diligence

Applicability: This guidance applies to banks supervised by the Federal Reserve that are subject 

to the Bank Secrecy Act.

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 a joint statement to remind banks1 of the risk-based approach to assessing customer 

relationships and conducting customer due diligence. 

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. 

Customer relationships present varying levels of money 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 of money laundering, terrorist financing, or other illicit financial activity. 

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 statement addresses the agencies’ perspective on assessing customer relationships as 

well as customer due diligence requirements. It applies to all customer types referenced in the 

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.
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Federal Financial Institutions Examination Council (FFIEC) BSA/AML Examination Manual,

2

as well as any customer type not specifically addressed in the FFIEC BSA/AML Examination 

Manual. 

Federal Reserve Banks are asked to distribute this letter to the supervised institutions in 

their districts and to appropriate supervisory staff. In addition, supervised organizations may 

send questions via the Board’s public website.3

Arthur Lindo

Deputy Director

Division of Supervision and Regulation

Attachment:

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

Conducting Customer Due Diligence

2 See https://bsaaml.ffiec.gov/manual. 

3 See, http://www.federalreserve.gov/apps/contactus/feedback.aspx
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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 

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 banks1 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.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.3

Customer relationships present varying levels of money 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 of money 

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 

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.

2 31 CFR 1020.210(a)(2)(v). 3 Ibid.
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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.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.

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,

6 including, for example, independent automated teller machine owners or 

operators,

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. 

4 Joint Statement on the Risk-Focused Approach to BSA/AML Supervision, issued by 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, July 22, 2019. 5 This statement does not require banks to cease or modify existing risk management practices if the bank considers 

them necessary to effectively manage risk.

6 https://bsaaml.ffiec.gov/manual. 7 See FinCEN’s Statement on Bank Secrecy Act Due Diligence for Independent ATM Owners or Operators (June 

22, 2022).