On February 13, 2026, the Financial Crimes Enforcement Network (FinCEN) issued a significant order (FIN-2026-R001) granting exceptive relief to covered financial institutions from the long-standing requirement to identify and verify the beneficial owners of legal entity customers at each new account opening. While this development will be welcomed by many in the financial services industry as a meaningful reduction in regulatory burden, institutions should not view it as an invitation to scale back their broader anti-money laundering (AML) and Bank Secrecy Act (BSA) compliance efforts.
Link to What Does the Exceptive Relief Order Do? What Does the Exceptive Relief Order Do?
The order relieves covered financial institutions from the 2016 Customer Due Diligence (CDD) Rule’s requirement to identify and verify the beneficial owners of a legal-entity customer whenever that customer opens a new account. Under the prior framework, institutions were required to perform this verification at each account opening — regardless of whether the customer had just completed the same process days or even hours earlier.
Under the new relief, covered financial institutions may limit their identification and verification of beneficial owners to three specific circumstances:
- At Initial Account Opening – When a legal entity customer first opens an account with the institution.
- When Reliability Is in Question – Any time thereafter when the institution knows facts that would reasonably call into question the reliability of beneficial ownership information previously obtained.
- Based on Risk-Based Procedures – As needed, based on the institution’s risk-based procedures for conducting ongoing customer due diligence.
Importantly, when the third scenario arises — when an institution’s risk-based procedures indicate that re-verification is necessary — the institution may rely on previously obtained beneficial ownership information, provided the customer certifies or confirms (verbally or in writing) that it remains up to date and accurate. The institution must maintain a record of this certification or confirmation.
Link to Why Did FinCEN Issue This Relief? Why Did FinCEN Issue This Relief?
Since the 2016 CDD Rule took effect, covered financial institutions and industry trade associations have consistently voiced concerns that the account-by-account verification requirement imposed significant burdens without corresponding benefits to anti-money laundering efforts. Large corporate customers that frequently open new accounts faced duplicative certification requirements, creating compliance costs for both institutions and their customers while contributing little of value to financial crime prevention.
The order also aligns with Executive Order 14192, issued on January 31, 2025, which announced an administration policy to reduce unnecessary regulatory burdens while maintaining the essential safeguards that protect the U.S. financial system.
Link to What the Relief Does Not Change What the Relief Does Not Change
Financial institutions should take careful note of what this order does not do. Covered financial institutions must continue to comply with all other applicable AML and financial crime requirements under the BSA and its implementing regulations. This includes:
- Program Requirements – Institutions must still establish and maintain written procedures reasonably designed to identify and verify beneficial owners of legal entity customers and include such procedures in their AML compliance programs.
- Ongoing Due Diligence – Institutions remain obligated to conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information — including beneficial ownership information.
- Suspicious Activity Reporting – All reporting requirements under the BSA remain entirely in effect.
- Recordkeeping – Institutions must maintain records of any certifications or confirmations received from customers regarding the accuracy of previously obtained beneficial ownership information.
Link to The Continued Importance of a Risk-Based Approach The Continued Importance of a Risk-Based Approach
FinCEN’s order underscores the agency’s commitment to a risk-based approach to AML compliance. The order explicitly states that “this relief does not discourage covered financial institutions from exceeding minimum compliance requirements should doing so align with their risk profile and tolerance.” In other words, institutions retain discretion to continue their existing due diligence practices if those practices are appropriate for their particular risk environments.
This is a critical point. The exceptive relief provides flexibility — it does not require institutions to scale back their verification procedures. For institutions with higher-risk customer bases, more frequent beneficial ownership verification may remain appropriate and prudent, even if no longer strictly required at each account opening.
Link to Why This Is Not the Time to Let Your Guard Down Why This Is Not the Time to Let Your Guard Down
Recent enforcement actions serve as a stark reminder that regulators — and federal prosecutors — remain intensely focused on BSA/AML compliance. From community banks to the largest global financial institutions, no organization is immune from scrutiny. The OCC’s recent consent order with Clear Fork Bank demonstrated that regulators are not only focused on large institutions when it comes to BSA/AML deficiencies. And TD Bank’s historic $3.1 billion money laundering settlement stands as a warning to all financial institutions about the consequences of compliance failures.
Against this backdrop, the message from FinCEN’s order should be clear: Regulatory streamlining is welcome, but it is not a substitute for robust, risk-based compliance programs. Institutions that view this relief as an opportunity to reduce their compliance investments do so at their peril. The core obligations of the BSA — knowing your customer, monitoring for suspicious activity, and maintaining an effective AML program — remain as important as ever.
Link to Practical Takeaways for Financial Institutions Practical Takeaways for Financial Institutions
As you evaluate how to incorporate this exceptive relief into your operations, consider the following:
- Review Your CDD Procedures – Assess whether and how you want to modify your current beneficial ownership verification procedures in light of this relief.
- Update Policies and Training – Ensure that your policies, procedures, and staff training materials reflect the new framework — including the circumstances under which verification is still required.
- Document Risk-Based Decisions – If you elect to rely on previously obtained beneficial ownership information, ensure you have robust processes to document customer certifications or confirmations and to flag circumstances that would trigger re-verification.
- Don’t Abandon Good Practices – Consider whether your current practices serve legitimate risk management purposes beyond mere regulatory compliance. If so, think carefully before eliminating them.
- Stay Tuned for Further Developments – FinCEN has signaled that additional changes to the CDD Rule are forthcoming through the rulemaking process. Monitor these developments closely.
Link to Conclusion Conclusion
FinCEN’s exceptive relief order represents a meaningful step toward a more efficient, risk-based approach to customer due diligence. Financial institutions will benefit from reduced duplicative compliance activities, and their customers will appreciate streamlined account-opening processes. But this relief must be understood within its proper context: The BSA’s foundational requirements remain firmly in place, and the expectation that financial institutions maintain effective AML programs has not changed.
The financial services industry should welcome this development — while remembering that regulatory relief is not the same as regulatory permission to relax. Maintaining a strong culture of compliance is not just a legal obligation; it is essential to protecting your institution, your customers, and the integrity of the U.S. financial system.