The US Financial Crimes Enforcement Network (FinCEN) recently issued a statement to address independent Automated Teller Machine (ATM) owners and operators and, in particular, how banks should conduct customer due diligence (CDD) in accordance with the requirements established in FinCEN’s 2016 CDD Rule. FinCEN’s statement, published on June 22, 2022, reaffirmed to banks that not all independent ATM owners or operators pose a high risk of money laundering, terrorist financing (ML/TF), and it is entirely possible for banks to comply with the Bank Secrecy Act/anti-money laundering (BSA/AML) regulatory requirements and have customer relationships with independent ATM owners and operators, including those that are classified as Independent Sales Organizations (ISOs).
FinCEN explains in its statement that all independent ATM owners and operators generally need bank accounts to supply cash for their ATMs and to settle the electronic fund transfers used to process the ATM transactions, and these accounts are subject to BSA/AML regulatory requirements and the CDD, including customer identification requirements, beneficial ownership of legal entity customers, currency transaction reporting, and suspicious activity reporting. According to FinCEN, independent ATM owners/operators are not inherently riskier than other customers, but their risk varies based on the facts and circumstances specific to the customer relationship, such as transaction volume, ATM locations and the source of funds used to replenish the ATMs. While the CDD Rule does not specifically require banks to collect this information, FinCEN makes several recommendations that banks should consider when determining an independent ATM owner or operator customer’s ML/TF risk assessment profile, including information regarding its organizational structure; its operating policies, procedures and internal controls; the source of funds used to replenish the ATM if a bank account is not used; and its ATM currency servicing arrangements.
FinCEN’s Statement on Bank Secrecy Act Due Diligence for Independent ATM Owners or Operators