by Katherine Mooney Carroll, Paul Marquardt, Patrick Fuller, and Graham Bannon
On August 21, the Financial Crimes Enforcement Network (FinCEN), together with the federal banking agencies[1] (the “Agencies”), released a statement (PDF: 220 KB) (“Statement”) to clarify banks’ customer due diligence (“CDD”) obligations for politically exposed persons (“PEPs”). The Statement affirms that (i) there is no regulatory requirement, and no supervisory expectation, for banks’ Bank Secrecy Act (BSA) / anti-money laundering (“AML”) programs to include “unique, additional due diligence steps” for customers who are PEPs and (ii) there is no regulatory requirement for banks to screen customers and their beneficial owners for PEPs. Instead, the Statement confirms that PEP customers should be subject to the same risk-based approach to CDD that applies to any other customer, but that PEP status (and screening for PEPs) may be a factor in developing a customer risk profile and assessing money laundering risk. It also reminds banks of the continued U.S. national security and law enforcement interest in detecting and combating public corruption and other criminality involving PEPs.