The Financial Crimes Enforcement Network (FinCEN) provides further information to financial institutions in response to the COVID-19 pandemic

Authored by Samuel Gehebe

To assist financial institutions in complying with their Bank Secrecy Act (BSA) obligations during the COVID-19 pandemic, the Financial Crimes Enforcement Network (FinCEN) released the March 16, 2020 COVID-19 Notice. The notice also announced a direct contact mechanism for urgent COVID-19 related issues and provides the following information:

Compliance with BSA obligations

The BSA assists in protecting the United States of America’s national security by combating money laundering and related crimes that include terrorism and terrorism financing. Financial institutions should continue to follow a risk-based approach during the COVID-19 pandemic as well as diligently adhere to their BSA obligations. FinCEN acknowledged the challenges COVID-19 has created in adhering to the BSA obligations, such as the timing requirements for certain BSA report filings. In response to these challenges, FinCEN suspended the implementation of FIN-2020-R001, which is discussed below.

Beneficial ownership information collection requirements for existing customers

With regards to the Paycheck Protection Plan (PPP):

1. For eligible federally insured depository institutions and federally insured credit unions – existing customers with PPP loans will not be required to re-verification under applicable BSA requirements, unless indicated otherwise by these entity’s risk-based approach to BSA compliance. The intent here is to streamline the process and make it easier for the users who already went through Customer Identification Program (CIP) verification process.
2. For non-PPP loans – FinCEN’s Sept. 7, 2018 ruling (FIN-2018-R004) offers certain exceptive relief to beneficial ownership requirements. This ruling grants exceptive relief to covered financial institutions from the Beneficial Ownership Rule’s requirement to identify and verify beneficial ownership information on or after May 11, 2018, as a result of:
   a. CD rollovers;
   b. Loan renewals, modifications and extensions that do not require underwriting review and approval;
   c. Commercial line of credit or credit card account renewals, modifications or extensions that do not require underwriting review and approval; and
   d. Safe deposit box rental renewals.

BSA reporting obligations and updates to Currency Transaction Report (CTR) filing obligations

FinCEN suspended, until further notice, implementation of the Feb. 6, 2020 ruling (FIN-2020-R001) on CTR filing requirements when reporting transactions involving sole proprietorships as well as entities under a Doing Business As (DBA) name. Financial institutions should continue to report transactions involving sole proprietorships and DBAs under prior practice until further information on these CTR filings is issued. Financial institutions that already made the changes to comply with FIN-2020-R001 do not need to revert to the prior practice and may report CTRs in accordance with this ruling which should ease the burden from the COVID-19 pandemic without creating additional work for entities.

New FinCEN COVID-19 online contact mechanism

FinCEN created a new COVID-19 specific online contact mechanism for financial institutions to communicate to FinCEN any COVID-19 related concerns while adhering to their BSA obligations. Financial institutions should visit FinCEN.gov to utilize the new contact mechanism. COVID-19 communications are not required. FinCEN encourages financial institutions to contact their functional regulator(s) or other BAS examining authority as soon as possible if there are BSA compliance concerns due to the COVID-19 pandemic.

The notice issued by FinCEN’s goal is to provide further information on the impact of the COVID-19 pandemic on financial institutions and how FinCEN is responding. They want entities to know that they are there to answer any questions and to reduce the overall burden that the COVID-19 pandemic impact is having on entities.

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