We’ve been getting a lot of questions about whether a “Refinance” falls under the broad definition of “Renewals” under the Beneficial Owner Rule.
After several discussions with representatives at FinCEN, we have a clarification for you!
According to FinCEN, a refinance is a transaction in which an existing obligation is satisfied and replaced by a new obligation. Whether or not the loan number changes or remains the same doesn’t matter. The question is simply will there be a NEW obligation? If the answer is “yes”, then there is a NEW contract and the transaction will NOT fall under the broad definition of a Renewal.
Why is this important? First, the relief provided by FAQ #12 in the April 3, 2018 Guidance that allows the customer and bank to enter an agreement whereby the customer will notify the bank of any change in beneficial owner information, rather than obtaining a new certification at “renewal”, will NOT apply to Refinances or any other new obligation.
Second, the May 16, 2018 90-day limited exceptive relief from the beneficial owner rules for “renewals and rollovers” will NOT apply to Refinances.
Maybe this wasn’t the answer you were hoping for, but at least it’s clarification that you can now train on and implement!
Remain Calm and Carry On!
Deb joined Banker’s Compliance Consulting with twenty years of experience in the banking industry. Her past positions include teller, credit review analyst, assistant financial officer, BSA Officer, Compliance Officer, and Director of Compliance. She has worked for both a small community bank and a large billion-dollar bank.
Deb has Associate Degrees in Business Management and Accounting. She is a graduate of the American Bankers Association National Graduate School of Compliance Management, an honors graduate of Schools of Banking Compliance School, and a graduate of Schools of Banking Advanced School of Banking. Deb’s considerable knowledge and experience make her a valuable member of the Banker’s Compliance Consulting Team. Deb is a Certified Regulatory Compliance Manager (CRCM) and a Certified Anti Money-Laundering Specialist (CAMS).
Deb loves to spend her free time cycling, running, kayaking and weight lifting with her husband. Between them, they have three adult children and six grandchildren. Other interests include anything outdoors and anything she hasn’t done or seen yet!