Beneficial Ownership Exceptive Relief

FinCEN Announces Limited Exceptive Relief of Beneficial Ownership Requirements

Just as the CDD rule rollout came and went last Friday, FinCEN issued a 90-day limited exceptive relief to covered financial institutions from the Beneficial Ownership Requirements on Wednesday, retroactive to May 11. This is specifically aimed at certain financial products and services that automatically rollover or renew (CDs, loan accounts, etc.) that were established before May 11.

When the exceptive expires on August 9, FinCEN is expected to “determine whether and to what extent additional exceptive relief may be appropriate” for these financial products and services. (Read the full administrative ruling here.)

To clarify, this exceptive doesn’t relieve FIs of the beneficial ownership obligations in regard to these products/services. It is just giving FinCEN 90 days to determine how they want to handle the Beneficial Ownership Requirements for these types of accounts moving forward.

The updated Beneficial Ownership Requirements originally stated that financial institutions needed to gather information on beneficial owners each time a new account is created. With CDs, loans and similar financial products and services, this would mean every time a CD is rolled over or a loan is renewed, a new account is created, and the financial institution would have to gather beneficial ownership information on the same customers over and over again.

FinCEN acknowledged that a lot of financial institutions expressed concern with their ability to comply with the Beneficial Ownership Requirements in regard to these accounts, because historically they haven’t treated them as new accounts, and usually apply automatic processes to continue the banking relationship.

While this has temporarily relieved some of the anxiety around the new CDD rule, there are many other factors institutions need to consider to ensure CDD readiness.  This may include Board or front line training, policies and procedures, or something as simple as how you will retain the new certifications required.  Our experts at Banker’s Toolbox are here to help.  Call us for more information on our Fifth Pillar Program Evaluation to ensure you are ready to meet your regulators at the door with a confident smile.

If you are short staffed and are looking for some relief, Banker’s Toolbox has a CAMS certified team members who will work with you to ensure your BSA program’s health stays strong.  Learn more about the services we offer or contact an expert today.