Exempt Persons in CRCM: Certified Regulatory Compliance Manager Exam - ABA

Which Customers Qualify as Exempt Persons?

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Question

First National Bank is attempting to determine which of the following customers would qualify as exempt persons:

" Nationwide Foods, Inc., is a national company with stock listed on the New York Stock Exchange

" National Paper Products, is a wholly owned subsidiary of Nationwide Foods, Inc.

" Products Incorporated, a depositor for three months, is a regional company whose stock is designated a NASDAQ Capital Markets Company and that sells and leases large boats

" Century Enterprises, a local company owning several local restaurants, is a longtime bank customer and frequently makes deposits in excess of $10,000. All of

Century's stock is owned by a local family. Which of these customers would qualify as an exempt person?

Answers

A. All except for Nationwide Foods, Inc.

B. All except for National Paper Products

C. All except for Century Enterprises

D. All except for Products Incorporated

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Explanations

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A. B. C. D.

The term "exempt person" typically refers to a customer who is exempt from certain regulatory requirements that financial institutions must follow under the Bank Secrecy Act (BSA), such as the requirement to file Currency Transaction Reports (CTRs) for certain transactions.

To determine which customers qualify as exempt persons, we need to consider the criteria set forth by the BSA. Specifically, an exempt person is defined as:

A bank;
A governmental entity;
An established commercial customer that has a transaction account established with the bank, has a physical presence in the U.S. and is not a foreign shell bank.

Let's analyze each customer in the given list:

Nationwide Foods, Inc.: This is a national company with stock listed on the New York Stock Exchange. It does not meet the BSA's definition of an exempt person. Therefore, this customer does not qualify as an exempt person.
National Paper Products: This is a wholly owned subsidiary of Nationwide Foods, Inc. Since it is a commercial customer with a physical presence in the U.S. and has a transaction account established with the bank, it could qualify as an exempt person. However, we do not have enough information to make a definitive determination, since we do not know whether it meets all the BSA criteria. Therefore, we cannot say for certain whether this customer qualifies as an exempt person.
Products Incorporated: This is a regional company whose stock is designated a NASDAQ Capital Markets Company and sells and leases large boats. It does not meet the BSA's definition of an exempt person. Therefore, this customer does not qualify as an exempt person.
Century Enterprises: This is a local company owning several local restaurants, is a longtime bank customer, and frequently makes deposits in excess of $10,000. All of Century's stock is owned by a local family. Since it is a commercial customer with a physical presence in the U.S. and has a transaction account established with the bank, it could qualify as an exempt person. However, we do not have enough information to make a definitive determination, since we do not know whether it meets all the BSA criteria. Therefore, we cannot say for certain whether this customer qualifies as an exempt person.

Based on the above analysis, we can conclude that:

Nationwide Foods, Inc. does not qualify as an exempt person.
Products Incorporated does not qualify as an exempt person.
National Paper Products and Century Enterprises could potentially qualify as exempt persons, but we do not have enough information to make a definitive determination.

Therefore, the correct answer to the question is D) All except for Products Incorporated.

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