Recently we have sent an MSB questionnaire to all our business accounts holders and I have a case where the business is an Exempt account under phase II, yet we came to find out that they own an ATM. My question is do we need to remove the exemption and place them on the High Risk list or owning an ATM doesn’t affect their exemption status?

Owning an ATM does not affect their exemption status. It certainly makes them higher risk but they can remain exempt. I would however be on the lookout for any inelgible activities as defined in the BSA Exam Manual. The Act states that if more than 50% of their gross income is derived from these activities that they cannnot be exempt. Personally, I would not be comfortable exempting a customer that owns private ATMs if they have a significant amount of inelibible activities. Even if it was far less than the 50% threshold. Just my preference.

I doubt that owning 1 ATM would put them over the 50% threshold for ineligible activities.

No, owning an ATM will not put them over the 50% threshold as there is nothing wrong with maintaining a private ATM. The presence of an ATM has nothing to do with ineligible activities.

The only reason I mention the ineligible activities is that I would be somewhat reluctant to give them an exemption IF they were involved in a substantial amount of ineligible activities. Ineligible activities are more susceptible to money lanundering and I would not be comfortable with providing lots of cash without filing CTRs to that sort sort of entity. Just my preference.