Q: What is the status of an exempt customer that previously was a listed public company but has reorganized as a private company?
A: If a Phase I customer no longer is a publicly-traded company, the customer is ineligible for a Phase I exemption. However, the bank 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,12 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.
Banks should note that a business's eligibility for exemption under the "listed business" provision may change over time, for example, as it makes an initial public offering or is privatized. This is the primary reason that listed businesses and their subsidiaries are the only Phase I exempt customers under the 2008 final rule for which banks must continue to file DOEP reports and conduct annual reviews. As part of those requirements, banks should have procedures for verifying whether a listed business remains eligible for exemption at least once per year. Annual reports, stock quotes from newspapers, or other information, such as electronic media can be used to document the review.
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: