The U.S. Treasury Department's Financial Crimes Enforcement Network ("FinCEN") issued an administrative ruling that will provide time-limited relief from the Beneficial Ownership Rule for financial products and services that were established before the Beneficial Ownership Rule became effective and that automatically rollover or renew (such as certificates of deposit or loan accounts). The Beneficial Ownership Rule, which went into effect on May 11, 2018, requires covered financial institutions to obtain information on the beneficial owners of a legal entity that opens a new account for each new formal banking relationship established, even if the legal entity is an existing customer. Historically, rollovers or automatic renewals constitute the establishment of a new "formal banking relationship," but financial institutions do not generally treat them as new accounts.
In granting the exemptive relief, FinCEN acknowledged industry concerns about compliance with the Beneficial Ownership Rule as it relates to rollovers or renewals, and stated that FinCEN intends to consider the issue further. Unless extended, the relief will expire on August 9, 2018.
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