Q: Are the Small Business Administration’s Paycheck Protection Program (PPP) loans for existing customers considered new accounts for Financial Crimes Enforcement Network (FinCEN) Customer Due Diligence (CDD) Rule purposes? Are lenders required to collect, certify, or verify beneficial ownership information in accordance with the rule requirements for existing customers?
Department of the Treasury PPP FAQ Response
Treasury’s PPP FAQs include a specific response to beneficial ownership and CDD requirements at account opening (see FAQ 18 at https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked- Questions.pdf ). If the PPP loan is being made to an existing customer and the necessary information was previously verified, you do not need to re-verify the information. Furthermore, if federally insured depository institutions and federally insured credit unions eligible to participate in the PPP have not yet collected beneficial ownership information on existing customers, such institutions do not need to collect and verify beneficial ownership information for those customers applying for new PPP loans, unless otherwise indicated by the lender’s risk-based approach to BSA compliance.
FinCEN’s April 3rd Notice addressed PPP loans as well as other extensions of credit (non-PPP loans). Refer to The Financial Crimes Enforcement Network Provides Further Information to Financial Institutions in Response to the Coronavirus Disease 2019 (COVID-19) Pandemic see https://www.fincen.gov/news/news-releases/financial-crimes-enforcement-network- provides-further-information-financial.
For eligible federally insured depository institutions and federally insured credit unions, PPP loans for existing customers will not require re-verification under applicable BSA requirements, unless otherwise indicated by the institution’s risk-based approach to BSA compliance.
For non-PPP loans, FinCEN reminds financial institutions of FinCEN’s September 7, 2018 ruling (FIN-2018-R004) offering certain exceptive relief to beneficial ownership requirements. To the extent that renewal, modification, restructuring, or extension for existing legal entity customers falls outside of the scope of that ruling, FinCEN recognizes that a risk-based approach taken by financial institutions may result in reasonable delays in compliance.
This Q&A was contained in the Frequently Asked Questions for Financial Institutions Affected by the Coronavirus Disease 2019 (Referred to as COVID-19) – As of March 3, 2021 (which may be updated from time to time). This may be found on the FDIC’s website here: https://www.fdic.gov/Coronavirus/faq-fi.pdf.