Money Laundering, Terrorism and Financial Institutions - USA Patriot Act Monitor

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01/04/2010 FinCEN Finds Banks Still Reluctant to Use Certain Exemptions or Provide Services to MSBs

FinCEN has released a report on bank practices and procedures regarding anti-money laundering programs. The Report notes that filing more than one SAR on a customer may trigger an exit strategy for some banks. The expense of the initial investigation that led to the filing of the SAR, and the expense of follow-up investigations, may make the customer relationship unprofitable. For large customers with multiple accounts, however, this can be difficult to implement. All banks indicated that they would keep an account open for investigative purposes if they received a request from law enforcement, but banks usually request an update every six months on whether the investigation is continuing (as we have recommended in prior Monitors). The report notes that while more banks are using currency transaction reporting exemptions, Phase II exemptions of “non-listed businesses” and “payroll customers” are still not popular with many banks. The banks say that not granting such exemptions avoids a lot of paper work and also avoids subjecting the institution to regulatory scrutiny. As to providing banking services to money services businesses, the report notes that some banks prefer not to provide services to check cashers, money transmitters, payday lenders, and title lenders. FinCEN’s bank report will be the subject of a detailed analysis in a forthcoming Monitor.


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