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#2220107 - 08/21/19 05:17 PM Trust Company and AML
complyorelse Offline
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We are a state-chartered, non-member bank so our regulator is the State and FDIC. We also have a trust company, with trust powers granted through the State. Our state does not examine for consumer compliance but does examine for S&S. During our FDIC S&S exams, we always have a portion of the exam dedicated to our trust company.

I was reading something that stated trust companies are exempt from AML requirements, but that CIP and some other general components do apply. I have never heard this and we have had both State and FDIC examiners examine our program, including AML.

Does this AML exemption apply to trust companies (or banks as identified in 1010.100) that are not associated with a federally insured bank? Our trust powers are held in a totally separate company.

We are working on reworking our policies which is why this is coming up.

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#2220108 - 08/21/19 05:28 PM Re: Trust Company and AML complyorelse
BrianC Online
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I don't know what it is that you are reading and without a source I can't possibly opine.

Trusts are excluded from the definition of legal entity for beneficial ownership so if a trust is your customer you don't need a certification, but they are not excluded from other BSA requirements.

There is even a trust and asset management section of the BSA/AML Exam Manual which addresses risk and monitoring requirements for this business line.

https://bsaaml.ffiec.gov/manual/ProductsAndServices/21
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#2220115 - 08/21/19 05:50 PM Re: Trust Company and AML complyorelse
rlcarey Online
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Brian - I think they are saying they have an affiliate that is a separate trust company and want to know what the trust company's AML responsibilities are. They are not talking about a customer.
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#2220127 - 08/21/19 06:21 PM Re: Trust Company and AML complyorelse
complyorelse Offline
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That is correct, Randy. CIP, OFAC, and information sharing (314a) are all still required. I'm just not sure what is technically NOT required.

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#2220130 - 08/21/19 06:28 PM Re: Trust Company and AML complyorelse
BrianC Online
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Illinois
Thanks, Randy.

So once upon a time trust companies that were not subject to regulation by a federal regulator are exempt from the requirement of establishing an AML Program under 1010.205. CTR and SAR filing are still required.

However, FinCEN Issued a proposed rulemaking in August 2016 to eliminate this exception for trust companies.

https://www.federalregister.gov/doc...dering-programs-and-beneficial-ownership

I don't see that it is final, but it is coming. Also, some states may already expand the requirements to trust companies even if FinCEN hasn't finalized its rule. The FFIEC Exam Manual section applies to federally regulated banks that have a trust department as part of the ban itself, rather than an affiliate.
Last edited by BrianC; 08/21/19 06:29 PM.
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#2220146 - 08/21/19 07:17 PM Re: Trust Company and AML complyorelse
complyorelse Offline
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That is helpful and supports what I have found. Under the current statute, 31 USC 5318(h)(1) is the only exempt element: development of internal policies, procedures, and controls; designation of BSA officer, training, and independent audit. This blows my mind as I don't see how you can have an effective BSA (umbrella) program without these elements. How would anyone know that they needed to report suspicious activity (which does still have to be reported) if the trust employees don't know they have to look out for it.

This seems crazy but I have to stick with the fact that it isn't required for now. Very interesting.

Thanks so much for the help.

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