Exempt Customer Purchased by Non-exempt Company
Answer by Randy Carey and John Burnett, BOL Gurus Guru Bios
Question: We have a customer that is a Phase I exemption, however, we just found out during our annual review that they have been purchased by another company that does not fall under Phase I. What steps do we need to take?
Answer by Randy Carey: You should revoke the Phase I exemption and start filing CTRs. If they qualify for a Phase II exemption, you can file a Phase II exemption after 12 months.
Answer by John Burnett: You can use the customer's cash activity during the most recent twelve months (assuming they've been with you at least one year) in a decision whether to file a Phase II Designation of Exempt Person now. When you do so, however, make sure you don't include non-exemptible transactions (if there were any), such as currency exchanges, loan payments, etc.
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