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FinCEN
Provides guidance on Exemptions (cont'd)
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Corporate structure and reorganization – Question:
What is the status of an exempt customer that previously was a
listed public company but has reorganized as a private company?
Answer:
If a Phase I customer no longer is a publicly-traded company,
the customer is ineligible for a Phase I exemption. However, the
institution could evaluate the customer for potential exemption as a
non-listed business customer. If the bank’s assessment indicates
that the private company does not derive more than 50% of its gross
revenues from ineligible lines of business, has conducted five or
more reportable transactions in the previous year, and otherwise
meets all of the exemption criteria, the bank may exempt the company
as a non-listed business. (Note: There is further explanation in the
document).
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Ineligible businesses – Question:
Does FinCEN consider a hospital or doctor’s office to be
engaged in the practice of medicine and therefore ineligible for
exemption as a non-listed business?
Answer:
FinCEN interprets the term “the practice of medicine”
broadly, rather than focusing on the technicalities of individual
state laws governing the licensing of medical practitioners.
Accordingly, any entity that derives more than 50% of its gross
revenues by offering medical services is ineligible for exemption as
a non-listed business. This interpretation would likely exclude most
privately-owned hospitals, doctors’ offices, or other medical
practices from being eligible for exemption as non-listed
businesses.
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Suspicious activity of an exempt customer –
Question:
Is a customer that has been the subject of a Suspicious
Activity Report eligible for initial or continued exemption?
Answer:
A financial institution is required to file a SAR, where
appropriate, regarding the activities of any of its exempt
customers. However, if an exempt person is involved in a transaction
that has been reported in a SAR, the bank is not required to cease
treating the person as exempt. The decision to exempt, or to retain
or revoke a customer’s exemption, should be made by the bank in
accordance with its risk-based anti-money laundering policies,
procedures, and controls.
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Revoking the exemption – Question:
If an institution ceases to treat a customer as exempt, and
begins or intends to begin filing CTRs on that customer for the next
reportable transaction, must the institution formally revoke the
exemption by filing the DOEP form and selecting the “exemption
revoked” box?
Answer:
Institutions have never been required to formally revoke an
exemption using the DOEP form. Generally, examiners or other users
of BSA data would be able to rely on a pattern of reporting to know
that a customer is no longer being treated as exempt. (Note there is
further guidance in the document.)
Fin-2009-G-003 can be reviewed at www.fincen.gov/statutes_regs/guidance/html/fin-2009-g003.html.
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