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FinCEN, federal banking agencies clarify CDD requirements for charities and non-profit organizations

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On November 19, the Monetary Crimes Enforcement Community (FinCEN), in concurrence with the Federal Reserve Board, FDIC, NCUA, and OCC (collectively, “federal banking companies”), released a fact sheet clarifying that Financial institution Secrecy Act (BSA) buyer due diligence (CDD) necessities for charities and nonprofit organizations (NPOs) ought to be primarily based on the cash laundering dangers posed by buyer relationships. FinCEN and the federal banking companies remind banks that “the applying of a risk-based strategy for charities and different NPOs is in step with present CDD and different [BSA/anti-money laundering] compliance necessities.” The very fact sheet additional emphasizes that whereas “the U.S. authorities doesn’t view the charitable sector as a complete as presenting a uniform or unacceptably excessive threat of getting used or exploited for cash laundering, terrorist financing [], or sanctions violations,” banks should undertake risk-based procedures for conducting CDD that can enable banks to (i) perceive the character and function of a buyer relationship in an effort to develop a buyer threat profile, and (ii) conduct ongoing monitoring for the needs of figuring out and reporting suspicious transactions “on a threat foundation, to take care of and replace buyer info.” The very fact sheet doesn’t alter present BSA/AML authorized or regulatory necessities, nor does it set up new supervisory expectations. (See additionally OCC Bulletin 2020-101 and FDIC FIL-106-2020.)

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