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FinCEN issues Exceptive Relief for Certificate of Deposit and Loan Renewals

Many TCA clients have expressed concerns regarding FinCEN’s position that automatic renewals of certificates of deposits and loans are considered new accounts which require that a financial institution obtain a Certification of Beneficial Ownership for legal entity customers. Since FinCEN published the Frequently Asked Questions just one month prior to the mandatory compliance date, our clients have struggled with procedures for obtaining the information, particularly for those accounts with maturity dates shortly after May 11, 2018.

Some of you inquired whether we had to have the beneficial ownership information on the date of maturity, by the end of the grace period, or whether we could take a risk‐based approach to collect the information within a reasonable period, such as 30 days following maturity. TCA’s position is that the final rule clearly states we must identify beneficial owners “at the time the account is opened.” This means that the deadline is the maturity date or, at the latest, the end of the grace period. This approach could mean that we are faced with making a certificate non‐renewable or even closing the account rather than risk non‐compliance with the fifth pillar.

FinCEN heard the industry’s concerns and issued an Administrative Ruling which grants financial institutions 90 days’ exceptive relief. For accounts established prior to May 11, 2018, we do not have to begin collecting beneficial ownership certification until August 9, 2018. For banks that are already contacting customers to obtain Certifications, you may continue this process, but do not need to take any action against those who do not respond immediately since the compliance date has been extended.

As your BSA Partner, the BSA Action Team (BAT) will continue to monitor FinCEN’s and the prudential regulators’ approach to the beneficial ownership rule. Contact a member of our team at [email protected] with your beneficial ownership questions, or to schedule a process review of your implementation or your next BSA Audit.

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