By the Division of Banks


October 23, 2012

To the Chief Executive Officer Addressed:

During meetings with members of the industry in 2011, there were several requests for guidance from the Division of Banks (Division) with respect to customer due diligence for Non-Bank ATM customers. This letter serves to clarify the Division's customer due diligence guidance for financial institutions with Non-Bank ATM customers. The customer due diligence performed on such ATMs is evaluated as part of the BSA/AML compliance review during Safety and Soundness examinations. During BSA/AML reviews, examiners assess the adequacy of policies, systems, and procedures in managing the risks associated with Non-Bank ATMs. Management's ability to develop and implement effective and appropriate due diligence procedures as well as monitoring and reporting systems for all customers is considered.

Customer due diligence entails, but is not limited to, reviewing corporate documentation including licenses, permits, registration, and the contract with the Independent Sales Organization, as well as ascertaining the sources of currency for the ATM. Pursuant to Massachusetts General Laws chapter 167B, any organization operating an ATM in Massachusetts must be registered with the Division. The Division maintains a database on its website which lists all registered Non-Bank ATMs in Massachusetts.

The Division has developed a Workprogram for examiners to assess the adequacy of an institution's customer due diligence procedures. In addition, the Division has prepared a sample Non-Bank ATM Account Opening Checklist (Checklist) that could assist financial institutions in obtaining the information necessary to perform adequate customer due diligence. The use of this Checklist is not required. However, some institutions may find the Checklist a useful resource as part of their customer due diligence. Both the Workprogram doc format of nonbankatmworkprogram.doc
and the sample Checklist doc format of nonbankatmchecklist.doc
are attached to this letter.

Should you have any questions relative to this matter, please contact Regional Field Manager Jane Hurter at 617-956-1500 Ext. 439 or at jane.hurter@state.ma.us.

Sincerely,

David J. Cotney
Commissioner of Banks