I just received notification that Shopko Stores, Inc. has now changed to Shopko Stores, LLC and they are no longer publicly traded. They were an exempt customer for our bank because of their exempt status. Have any of you guys heard about this? Shopko has sent us supporting documentation for their new LLC status and a W9 "awaiting TIN." Apparently this happened several months back, and Shopko just notified us of this change in status. Since they will have a new TIN, they will basically be a new customer and we will have to wait for them to have a transaction account with us for at least 12 months before we can exempt them, since they are now no longer publicly traded.

I discovered that they were no longer publicly traded when I did my annual exemption review in January. We have not been notified of any change to the business type or TIN though.

So, did you revoke their exemption?

No, there was no change in TIN, and they met all the qualifications for a Phase II exemption. I guess we did revoke the Phase I, but we added them as a Phase II.

We have just been notified of their new TIN, so I would think this makes them a new entity and would now need to have a transaction account for 12 months before they can again be exempted?

If a customer no longer meets the definition of a Phase I exempt person then you would file the DOEP indicating it was a revocation. There is no provision in the regulation for "switching" an exemption from a Phase I to a Phase II. The LLC is a new customer and, under Phase II, you need a year's experience with the new customer to recognize them as an exempt person.

Nevertheless, I have heard anecdotal evidence from bankers that when they call FinCEN with this scenario they are told they can simply amend the exemption as long as the surviving customer meets Phase II requirements. I don't think that is technically correct, but when the Big Dog says it's okay, then you may conclude it's okay because the Big Dog says so.

Make your own call to FinCEN. If you are told that an amendment is acceptable document the phone call by writing a letter to the person you spoke with recapping your conversation. Your examiners and your auditors may want to see it.

From my perspective, you have a new customer and you start over.

I agree that they will need to be considered a new customer and we start all over again. We will be revoking their exemption and wait for the 12 months. Unfortunately, we just heard about this change, which was effective in May of this year. Can we revoke their exempt status as of now and start filing CTRs or do we need to worry about the time period from May when the change occured until now, when we were notified of it?

I just spoke to FinCEN today and they said to revoke the Phase I exemption and at the next reportable transaction amend the revoked exemption to be a Phase II. No need to file for a year first as if they were a new customer. When I asked if I could get something in writing he said I could write a letter asking for 'guidance' but he wasn't sure they had anything on this situation and it would take a long time. Then what 'guidance' did he just give me?? I don't know, we're just going to document the phone call although we still haven't heard anything from Shopko!?