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Bank Secrecy Act obligations in the COVID-19 world

Apr 13, 2020

The Financial Crimes Enforcement Network (FinCEN) has provided information to assist financial institutions in complying with Bank Secrecy Act (BSA) obligations during the COVID-19 pandemic and has also provided a direct contact mechanism for communicating urgent COVID-19 related issues.

BSA compliance remains crucial, even in these trying times. FinCEN recognizes that financial institutions are taking actions to protect employees, families and others — and these actions have created challenges for meeting BSA obligations.

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) contained the Paycheck Protection Program (PPP). Together, the U.S. Treasury and SBA issued guidance stating that for PPP loans to a lender’s existing customers for whom beneficial ownership was previously verified, there is no need to re-verify the information.

In addition, for institutions originating PPP loans to existing customers for whom beneficial ownership had not previously been verified, there is no need to collect and verify beneficial ownership information, unless otherwise indicated by the lender’s risk-based approach to BSA compliance. Therefore, if the lender’s BSA program includes only the regulatory requirements for beneficial ownership, with no enhanced standards based on risk, the exemption for certification or recertification of beneficial ownership will allow for a more streamlined application and approval process.

However, if the lender’s program includes enhanced risk-based procedures, those procedures would need to be followed, or the lender could consider carving out an exclusion to those provisions of the written program via a board resolution approving temporary amendments to the beneficial ownership requirements for this narrow purpose.

FinCEN also suspended implementation of a recent ruling (FIN-2020-R001) on CTR filing requirements for transactions with sole proprietorships and entities operating under a “doing business as” (DBA) name that was scheduled for mandatory implementation for some filers on April 6, 2020, until further notice. Financial institutions may continue to report transactions involving sole proprietorships and DBAs under the prior practice. If an institution already made changes to comply with the recent ruling, there is no need to revert to prior practice.

A special COVID-19-specific contact form is now available, to communicate COVID-19-related concerns to FinCEN

FinCEN will review the communications and, depending on the volume of such communications, may only respond via an automated message confirming receipt to communications regarding delays in filing BSA related reports due to COVID-19. Financial institutions are encouraged to contact their functional regulator or other BSA examining authority as soon as practicable if there are BSA compliance concerns due to COVID-19; and are encouraged to keep regulators and FinCEN informed as circumstances change.

FinCEN encouraged institutions to evaluate and responsibly implement innovative approaches to meet BSA/anti-money laundering obligations.

Need help?

For assistance in understanding BSA obligations and applicable exemptions during the COVID-19 pandemic, contact Michael Moreau at Michael.moreau@wipfli.com or Robin Guthridge at rguthridge@wipfli.com.

Author(s)

Mike Moreau
Michael P. Moreau, CIA, CFE, CFSA
Manager
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