On September 7, 2018, the Financial Crimes Enforcement Network (FinCEN) granted exceptive relief to “covered financial institutions”—banks, broker-dealers, mutual funds, and introducing brokers in commodities—from the requirement to identify and verify the identity of the beneficial owner(s) of their legal entity customers when those customers open 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 approval.
- 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.
This exceptive relief applies only to the rollover, renewal, modification, or extension of any of these types of accounts on or after May 11, 2018 (the date on which covered financial institutions became obligated to collect and verify beneficial ownership information), and does not apply to the initial opening of such accounts. The exceptive relief does not affect the other obligations that covered financial institutions have under the Bank Secrecy Act (BSA) and its implementing regulations with respect to such accounts. This includes, in particular, the obligation that covered financial institutions have to understand the “nature and purpose” of customer relationships, and to “conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information.”
For more information, please see Crowell’s Client Alert.