On Friday, September 7, 2018, the Financial Crimes Enforcement Network (FinCEN) issued a ruling which grants certain exceptions for financial institutions from the Beneficial Ownership Rule. Specifically the ruling provides financial institutions relief from the obligations under the Beneficial Ownership Requirements of identifying Legal Entity Customers in the case of:
•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; and
•A renew al of a safe deposit box rental.
FinCEN deems each of these account relationships to presents low risks for money laundering and terrorist financing because they make such activity impractical.
Prior to this action, on May 16, 2018, FinCEN issued a 90-day temporary exceptive relief, retroactive to May 11, 2018, which was then extended an additional 30 days on August 8, 2018. Similar to the September 7 ruling, the May 11 temporary rule provided exceptive relief from the Beneficial Ownership Rule for products and services that automatically rolled over or renewed (i.e., CD or loan accounts) and were established before the Beneficial Ownership Rule’s Applicability Date of May 11, 2018. This exceptive relief replaces and supersedes the May 16, 2018, temporary rule, as well as the August 8, 2018, 30-day extension.
FinCEN’s ruling is available here.
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