First National Bank is attempting to determine which of the following customers would qualify as exempt persons:
" Nationwide Foods, Inc., is a national company with stock listed on the New York Stock Exchange
" National Paper Products, is a wholly owned subsidiary of Nationwide Foods, Inc.
" Products Incorporated, a depositor for three months, is a regional company whose stock is designated a NASDAQ Capital Markets Company and that sells and leases large boats
" Century Enterprises, a local company owning several local restaurants, is a long-time bank customer and frequently makes deposits in excess of $10,000. All of
Century's stock is owned by a local family. Which of these customers would qualify as an exempt person?
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A. B. C. D.D
To determine which of the customers would qualify as exempt persons, we need to consider the criteria for exemption under the Currency and Foreign Transactions Reporting Act (31 U.S.C. 5311 et seq.) and its implementing regulations, also known as the Bank Secrecy Act (BSA). The BSA requires financial institutions to report certain currency transactions, including deposits, withdrawals, and exchanges, that exceed $10,000 in a single business day, as well as suspicious activity that may indicate money laundering or other illicit activity.
Exempt persons are those who are not subject to these reporting requirements, based on their nature or type of business, as specified in the BSA regulations. The regulations provide a list of exempt persons, which includes certain types of entities that are considered low-risk for money laundering, such as banks, government agencies, and publicly traded companies. The regulations also provide certain conditions that must be met for an entity to qualify as an exempt person, such as maintaining a certain level of financial transparency and not engaging in certain types of high-risk activities.
Let's examine each customer in the question and determine if they meet the criteria for exemption under the BSA regulations:
Nationwide Foods, Inc. - This is a national company with stock listed on the New York Stock Exchange. While being a publicly traded company is a factor that may qualify an entity as an exempt person, it is not sufficient by itself. The BSA regulations require that the entity have a class of securities listed on a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934. Since Nationwide Foods meets this requirement, it would qualify as an exempt person.
National Paper Products - This is a wholly owned subsidiary of Nationwide Foods, Inc. As a subsidiary of an exempt person, National Paper Products may also qualify as an exempt person, depending on whether it meets the criteria for exemption under the BSA regulations. Since we do not have enough information about National Paper Products' business activities or financial transparency, we cannot determine whether it qualifies as an exempt person.
Products Incorporated - This is a regional company whose stock is designated a NASDAQ Capital Markets Company and that sells and leases large boats. Being a NASDAQ Capital Markets Company is not a factor that qualifies an entity as an exempt person under the BSA regulations. Additionally, the business of selling and leasing large boats may be considered high-risk for money laundering, due to the large sums of money involved and the potential for international transactions. Therefore, Products Incorporated would not qualify as an exempt person.
Century Enterprises - This is a local company owning several local restaurants, is a long-time bank customer and frequently makes deposits in excess of $10,000. All of Century's stock is owned by a local family. Since Century Enterprises is not a publicly traded company, it cannot qualify as an exempt person based on that factor alone. However, it may qualify as an exempt person if it meets other criteria, such as having a certain level of financial transparency and not engaging in high-risk activities. Since we do not have enough information about Century Enterprises' business activities or financial transparency, we cannot determine whether it qualifies as an exempt person.
Based on the above analysis, the correct answer is (A) All except for Nationwide Foods, Inc., since National Paper Products and Century Enterprises may potentially qualify as exempt persons depending on whether they meet the criteria under the BSA regulations.