FinCEN's Beneficial Owner Exception For Certain Accounts Made Permanent

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Due to the significant outcry from financial institutions in regard to Financial Crimes Enforcement Network’s (FinCEN) April 3rd Customer Due Diligence (CDD) FAQs that clarified that the new beneficial ownership provisions will apply to certain products and services that automatically renew or rollover, FinCEN issued a Ruling on May 16, 2018, providing a 90-day limited exceptive relief from these requirements. A 30-day extension was issued Aug. 8, bringing the expiration of the exceptive relief to Sept. 8.  

This past Friday Sept. 7, FinCEN issued a Ruling making the exception permanent! The Ruling states that FinCEN grants "exceptive relief…to covered financial institutions from the obligations of the Beneficial Ownership Requirements for Legal Entity Customers (Beneficial Ownership Rule) and its requirement to identify and verify the identity of the beneficial owner(s) when a legal entity customer opens a new account as a result of the following:

  • A rollover of a certificate of deposit (CD)
  • A renewal, modification, or extension of a loan (e.g., setting a later payoff date) that does not require underwriting review and approva
  • A renewal, modification, or extension of a commercial line of credit or credit card account (e.g., a later payoff date is set) that does not require underwriting review and approval
  • A renewal of a safe deposit box rental

The exception only applies to the rollover, renewal, modification or extension of any of the types of accounts listed above occurring on or after May 11, 2018 and does not apply to the initial opening of such accounts. Credit unions must identify and verify the identity of beneficial owners of legal entity members at the initial account opening for such accounts occurring on or after May 11, 2018

Notwithstanding this exception, covered financial institutions must continue to comply with all other applicable anti-money laundering (AML) requirements under the Bank Secrecy Act (BSA) and its implementing regulations, including program, recordkeeping, and reporting requirements.

For more information see: FIN-2018-R003.

Source:  CUNA’s Compliance Blog, Sept. 7, 2018.

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