I have a sole propreitorship account that we have had of years & was exempted as a non-listed business in 2007. The owner requested that the name change and the TIN change on the account. He is incorporated. How would you handle this? It is still the same owner and same checking account. Would I do an amended DOEP? or would I revoke the sole propreitorship and have to wait 2 months as if it is a new customer before doing an initial designation? Would love you input!

O. K. I have read that you don't have to wait 2 months if the bank conducts and documents a risk-based assessment of the customer and forms a reasonable belief that the customer has a legitimate business purpose for conducting frequent transactions in currency. I guess frequent is 5 transactions. So should I file CTRs on the 1st 5 transactions in cash over $10,000 & than exempt this entity as an initial designation?

You are figuring it out. An individual who incorporates his business is a new customer, the corporation. To acknowledge that, my suggestion would always be that your new customer should observe the formalities of the corporation he as paid to establish and open a new account, not file maintenance the old one. As you note, you can wait two months or you can do a risk assessment in order to qualify your customer as an exempt person.

However, what you cannot do is bypass the requirement for the 5 large currency transactions. Apparently, there was some debate within FinCEN on why that would make any sense, but the way the regulations are written and the examples used in the supplementary information confirm that the "frequent transactions" are a condition precedent to gaining exempt person status.

As an aside, I think you are describing the best example for using the "risk assessment" option. You know this business and its owner... Write down what you know. Nevertheless, if it takes him a while to generate those five transactions you might just want to wait two months and spare yourself the increment in compliance risk. No one knows what imaginations field examiners will exercise when they evaluate these risk assessments...

Thank you for your reply!

Ken, would this hold true if it were a name and tax ID change on a corporation? If XYZ Inc, who has been exempted for 5 years, changes their name to ABC Inc, would the waiting period and 5 transactions still come into play or could the bank simply document the change (would they refile a DOEP stating the change?) and perform a risk assessment, still keeping them as exempt?

Or would they have to file 5 CTR's under the new company name first?

A name change would just require that you file an amendment, however this sounds like it might be more than a simple name change.

It is a family owned business. Father is selling to daughters. Account numbers are staying the same. My thought is to revoke, review, then reinstate....good thought?

If the daughters have formed a new corporation and is buying the business from the father - this is not a name change. It is a brand new corporation. Wait for five transactions, do your risk assessment, file the DOEP and resume. You don't have to wait two months:

Notwithstanding subparagraphs (d)(2)(vi)(A) and (d)(2)(vii)(A) of this section, and if the requirements under this paragraph (d) of this section are otherwise satisfied, a bank may designate a non-listed business or a payroll customer, as described in paragraphs (d)(2)(vi) and (vii) of this section, as an exempt person before the customer has maintained a transaction ccount at the bank for at least two months if the bank conducts and documents a risk-based assessment of the customer and forms a reasonable belief that the customer has a legitimate business purpose for conducting frequent transactions in currency.

Thanks!

The other option is that the daughters are simply buying the corporation from their father. Then, you do not have a new customer; i.e. you do not need to do anything in connection with the exemption. (Recent amendments eliminated the responsibility to report a change in control.)

From the facts offered, I cannot tell which of the two scenarios you are facing, but if you are not closing the accounts then you are treating it like a simple change in corporate ownership. You need to be certain which scenario applies.