Beneficial Ownership 90-Day Limited Exception – READ CAREFULLY!

On May 16th, FinCEN issued a ruling that provides a 90-day exception to the beneficial ownership requirements for certificates of deposit (CD) and loans that automatically renew.  Why Jerod11the new ruling?  Because FinCEN also issued FAQs on April 3rd clarifying that for accounts established before May 11, 2018, banks would be required to collect Beneficial Owner information prior to the first automatic renewal/rollover after that date.  The FAQ caused confusion and FinCEN has decided that further consideration is needed.

As for the May 16th ruling, let’s start with the exception timeframe.  It’s only temporary and runs from May 11, 2018, to August 9, 2018.  It applies specifically and we believe “exclusively” to CDs and loans that “automatically” renew.  In other words, the exception does not apply to a CD that matures or a CD that is approaching maturity but does not have an automatic renewal feature.  It also does not include any loan that does not have an automatic renewal feature.

I have to admit that I misread the ruling the first time.  I read it how I wanted it to read not what it actually said.  My first read had me applying the exception to any CD or loan renewal.  Unfortunately, that’s not how it was written.  In my opinion, the renewal must be automatic.  If it’s not you must treat the event as a “new account” subject to the Beneficial Ownership rules.

If you want more information on the April 3rd FAQs, be sure to check out our “NEW FAQs for Customer Due Diligence and Beneficial Owners” webinar.  This webinar was originally recorded on April 20th and is available for purchase in our store.

Published
2018/05/18
Jerod Moyer

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