OCC Bulletin 2020-77| August 21, 2020

Bank Secrecy Act/Anti-Money Laundering: Joint Statement on Bank Secrecy Act Due Diligence Requirements for Customers Who May Be Considered Politically Exposed Persons

To

Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties

Summary

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Financial Crimes Enforcement Network today issued a joint statement to address certain questions raised by financial institutions related to Bank Secrecy Act (BSA) and anti-money laundering (AML) regulatory requirements for customers whom banks may consider to be politically exposed persons.

Rescissions

This bulletin and joint statement rescind OCC Bulletin 2001-9, “Bank Secrecy Act/Anti-Money Laundering: Guidance on Foreign Official Corruption,” and its attachment, “Guidance on Enhanced Scrutiny for Transactions That May Involve the Proceeds of Foreign Official Corruption.”

Note for Community Banks

This bulletin applies to community banks.1

Highlights

The statement

  • explains that the term “politically exposed person” (PEP) is commonly used to refer to foreign individuals who are or have been entrusted with a prominent public function, as well as their immediate family members and close associates. 
  • explains that the BSA/AML regulations do not define the term “PEP,” which should not be confused with the term “senior foreign political figure” as defined under the BSA private banking regulation,2 and explains that the agencies do not interpret the term “PEP” to include U.S. public officials.
  • clarifies that the customer due diligence rule does not create a regulatory requirement and that there is no supervisory expectation for banks to have unique, additional due diligence steps for customers who are considered politically exposed persons. The rule does not create such a regulatory requirement or supervisory expectation for U.S. federal, state, or local public officials.
  • clarifies how banks can apply a risk-based approach to customer due diligence in developing risk profiles for their customers, including politically exposed persons, that is consistent with requirements contained in the Financial Crimes Enforcement Network’s 2016 customer due diligence final rule.3
  • addresses potential risk factors, levels and types of due diligence, and other BSA/AML regulatory requirements applicable to politically exposed persons’ relationships.

Further Information

Please contact James Vivenzio, Acting Director for BSA/AML Policy, at (202) 649-5470.

 

Grovetta N. Gardineer
Senior Deputy Comptroller of Bank Supervision Policy

Related Link

1 “Banks” refers collectively to national banks, federal savings associations, and federal branches and agencies of foreign banking organizations.

2 “Senior foreign political figure” connotes a subset under the concept of politically exposed persons that is specific to the context of private banking. Refer to 31 CFR 1010.605(p) and 1010.620.

3 “Customer Due Diligence Requirements for Financial Institutions,” 81 Fed. Reg. 29398 (May 11, 2016). Refer to 31 CFR 1010, 1020, 1023, 1024, and 1026.