FinCEN Issues Beneficial Owner Relief

On February 13^th, FinCEN issued an Order granting “exceptive relief” to the beneficial owner requirements, in certain circumstances.

The Order requires institutions to identify and verify the identity of beneficial owners of legal entity customers only in the following circumstances:

• when a legal entity customer first opens an account with a covered financial institution;
• any time thereafter when the covered financial institution has knowledge of facts that would reasonably call into question the reliability of beneficial ownership information previously obtained about the legal entity customer; and
• as needed based on a covered financial institution’s risk-based procedures for conducting ongoing customer due diligence.

FinCEN indicated that the current requirement to...identify and verify a legal entity customer’s beneficial owners at each new account...is increasingly inconsistent with FinCEN’s risk-based approach and ...efforts to modernize the BSA. However, FinCEN did also note that the Order should not be seen as discouraging institutions from exceeding the minimum requirements under the Order.

Ultimately, each financial institution should determine if, and to what extent, it might take advantage of the relief with the understanding that doing so likely requires changes to policy, procedures and processes.