I think I have lost my mind. Can you or would you (due to higher risk of money laundering) exempt a customer who is a scrap metal dealer?

I thought it was recommended or guidance states specifically that you should not - but I can not find it.

Thanks.
WM

I dont know that I have read anywhere that you cannot exempt a scrap metal dealer so if anyone has any insight I would also be interested. We have quite a few and are considering exempting some of the high dollar frequent customers.

Our OCC regulator told us we couldn't since our dealer also scraps automobiles.

We exempted a long standing one this year. Works on big building, etc. tear downs. We still monitor for structuring, etc. If examiners say stop, then we will, however we had the Feds here a couple months ago and they said nothing......Of course, we only exempted one....

Auto dealers are a higher risk as the autos are high value items that money launderers traditionally have purchased and shipped overseas for resale.
It would seem to be a huge leap from that scenario to scrapped autos.
Scrap dealers may be high risk because of the cash involved in the industry, - not because of the autos.

I'm not brave enough to exempt a scrap metal dealer. In addition to being cash-intensive, they seem to be susceptible to some of the trade-based laundering tactics used by importers/exporters (i.e. underpricing & false invoices).

The interpretation that a scrap dealer is automatically considered to buy or sell automobiles is simply wrong. Magic City correctly pointed out the reason why automobile, vessel, and aircraft dealerships are ineligible. They deal in high dollar, fungible items that can be purchased for cash and, later, sold for cash in a different country; i.e. they can be used to launder money.

"Scrap" does not have those characteristics.

As Hovis says, it's a matter of judgement laced with personal courage.