[kmeade]

When Auto-Renewing a Certificate of Deposit (CD) if we attempt to get the beneficial ownership information from the account holder prior to the renewal date, but the customer doesn’t respond what options do we have? From what I read we need to close the CD and mail the customer a check.

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[susan costonis]

Thanks for your question. While FAQ #12 does address the fact that a CD renewal IS a new account if it renews on or after May 11, 2018, the FAQ does not expressly outline expectations that a renewed CD should be closed if the customer doesn’t respond to the request for updated information. This link is to a thoughtful article written on April 23rd in the ABA Banking Journal: https://bankingjournal.aba.com/2018/04/what-you-may-not-know-about-the-beneficial-ownership-rule/

When in doubt, CHECK WITH YOUR PRIMARY REGULATOR for guidance. I believe that the rules give us 3 options:
1. Identify and verify the beneficial ownership information for the legal entity.
2. Use existing information and confirm that it is still accurate.
3. Execute and agreement with the legal entity that they will notify you of any changes from THAT customer for THAT product. (Note – the agreement is only valid for that particular product & customer; it is not a blanket agreement for all accounts).

It is true that the CDD procedures should identify when an account should be closed because there are issues with the beneficial ownership information and that “warning” was on the first page of the FAQ’s as shown below. However, it does seem that FinCEN does acknowledge CD renewals are typically a lower risk account.

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