Following two temporary orders for limited exceptive relief, the Financial Crimes Enforcement Network ("FinCEN") granted a permanent carve-out for compliance with the Beneficial Ownership Rule as it relates to "new accounts" consisting of:
- a rollover of a certificate of deposit;
- a renewal, modification, or extension of a loan that does not require underwriting review and approval;
- a renewal, modification, or extension of a commercial line of credit or credit card account (e.g., a later payoff date is set) that does not mandate underwriting review and approval; and
- a renewal of a safe deposit box rental.
FinCEN described the relief as strictly limited to rollovers, renewals, modifications or extensions of any of the above occurring on or after May 11, 2018. FinCEN also noted that the relief does not apply to new accounts initially obtaining one of the above-listed services or provide any other exception from a financial institution's compliance obligations under the Bank Secrecy Act.
Commentary
In the case of rollovers of certain customer accounts that were opened prior to the effective date of the Beneficial Ownership Rule, FinCEN acknowledged that the compliance burden was not commensurate with the money laundering and terrorist financing risk these accounts posed. This permanent relief is the first true recognition by FinCEN that compliance with the Beneficial Ownership Rule may be more costly and complex than originally anticipated for certain types of transactions, and FinCEN appears to have leant significant credence to the views of financial industry stakeholders and law enforcement in making this determination. As the impact of the Beneficial Ownership Rule continues to be felt it will be interesting to see if FinCEN remains open-minded to additional requests for relief or clarification.
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