Determine if Fastfood, Inc. is an Exempt Person
Question
Fastfood, Inc., a nationwide restaurant chain, opened an account at First National Bank last year. Fastfood is making daily deposits in amounts of $15,000 to
$20,000. First National needs to determine if this company is an exempt person. What should the bank do first?
Answers
Explanations
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A. B. C. D.B
In order to determine if Fastfood, Inc. is an exempt person, the bank should first consider the guidance provided in the Bank Secrecy Act (BSA) regulations. Exempt persons are those that are not subject to the same reporting and recordkeeping requirements as non-exempt persons.
Option A, providing an unlimited exemption for cash deposits and withdrawals, is not a proper course of action without first determining if the customer qualifies for an exemption.
Option B, looking in the newspaper or on the Internet to determine if Fastfood, Inc.'s stock appears on one of the listed exchanges, is not relevant in determining if the customer is an exempt person.
Option C, asking the company if it qualifies as a listed business, is not a sufficient way to determine if the customer is an exempt person. Even if the customer claims to be an exempt person, the bank must perform its own analysis to determine if the customer meets the requirements for an exemption.
Option D, performing a corporate records check to determine if the company is chartered in the United States, is also not sufficient to determine if the customer is an exempt person. While this information may be useful in determining the customer's legitimacy, it does not provide any insight into whether the customer is exempt from BSA reporting and recordkeeping requirements.
The bank should follow the BSA regulations to determine if Fastfood, Inc. qualifies as an exempt person. The BSA regulations provide a list of exempt persons, which includes, among others, certain banks, government entities, and publicly traded companies. The bank should examine Fastfood, Inc.'s status as a publicly traded company to determine if it qualifies for exemption. If Fastfood, Inc. is a publicly traded company, the bank should verify that the customer's account is held in the name of the publicly traded company and not a subsidiary or affiliate. If Fastfood, Inc. meets the requirements for exemption, the bank can provide an exemption from certain reporting and recordkeeping requirements.
