Exceptive Relief – How do Beneficial Ownership requirements apply for rollovers, renewals, modifications, and extensions of certain accounts?

Compliance > BSA > FinCEN CDD/BO Rule - eff 2016
Q:  How do Beneficial Ownership requirements apply for rollovers, renewals, modifications, and extensions of certain accounts? 
 
A:  In September, 2018, FinCEN issued a ruling that addressed exceptive relief from beneficial ownership requirements in specific situations.  In part, the ruling included the following (without footnotes):
 
 
“The Financial Crimes Enforcement Network (FinCEN) grants exceptive relief under the authority set forth in 31 U.S.C. § 5318(a)(7) and 31 CFR § 1010.970(a) 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) (as defined below);
  • 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 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.  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.” 
 
 
 
This Q&A was based on FinCEN’s ruling issued on September 7, 2018, as communicated in FIN-2018-R003, which may be found here:  https://www.fincen.gov/sites/default/files/administrative_ruling/2018-09-07/Permanent%20Exceptive%20Relief%20Extension%20of%20Compliance%20Date%20CDs_final%20508.pdf
 

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