DOEP FAQs - Using the risk-based approach, can a bank exempt a non-listed business or payroll customer prior to the two month mark even if the customer has conducted fewer than five transactions?

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Q:  Using the risk-based approach, can a bank exempt a non-listed business or payroll customer prior to the two month mark even if the customer has conducted fewer than five transactions?
 
A:  No. The risk-based approach for determining when to exempt a Phase II customer gives latitude with respect to the timeframe only (i.e., allowing for exemption of customers that have been customers for less than two months). None of the other criteria necessary for Phase II exemption can be adjusted as part of that risk-based approach, including the criteria to for a non-listed business or payroll customer to engage frequently in reportable transactions. Thus, before a bank may exempt a non-listed business or payroll customer, that customer must have conducted at least five reportable transactions. FinCEN believes that without such a frequent large cash transaction volume, a bank could not reasonably expect to have sufficient knowledge of its customer to justify the risk-based approach.
 
 
ADDITIONAL INFORMATION:
This FAQ was obtained from FinCEN’s issuance FIN-2012-G003 – Guidance on Determining Eligibility for Exemption from Currency Transaction Reporting Requirements, which may be found here: 
 

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