On April 3, 2020, the Financial Crimes Enforcement Network (FinCEN) issued an update notice to financial institutions related to the COVID-19 Pandemic, covering five primary topics:
- Compliance with BSA Obligations
FinCEN emphasized the continued importance of BSA compliance in protecting national security by combating money laundering and related crimes, including terrorist financing. It is expected that financial institutions will continue to follow a risk-based approach and will adhere to BSA obligations. FinCEN acknowledged challenges presented by the pandemic and expressed appreciation for financial institutions in their efforts to protect employees and their families during this tumultuous time.
- Beneficial Ownership Information Collection Requirements for Existing Customers
The Paycheck Protection Program (PPP) was acknowledged as a primary component of the CARES Act. FinCEN further noted PPP loans would not require re-verification under applicable BSA requirements, unless otherwise required by the institution’s risk-based approach.
For non-PPP loans, FinCEN referenced FIN-2018-R004, which offers certain exceptive relief to beneficial ownership requirements. FinCEN noted that to the extent various loan modifications fall outside the scope of that ruling, reasonable delays in compliance are expected.
- BSA Reporting Obligations & Updates to Currency Transaction Report (CTR) Filing Obligations
FinCEN referenced various communications received from financial institutions and trade associations regarding the challenges in meeting CTR filing requirements in the current environment.
In response, FinCEN suspended implementation of FIN-2020-R001 related to sole proprietorships and “doing business as” entities until further notice.
For entities that had already implemented the new guidance, there is no requirement to revert to prior practices.
- New FinCEN COVID-19 Online Contact Mechanism
FinCEN has created a COVID-19 specific online contact mechanism. Financial Institutions are encouraged to proactively communicate questions and concerns to FinCEN using this new online tool.
- Encouragement of Innovative Efforts and Other Reminders
FinCEN reminded financial institutions of the December 3, 2018 FFIEC Joint Statement on Innovative Efforts to Combat Money Laundering and Terrorist Financing in which financial institutions were encouraged to “consider, evaluate, and, where appropriate, responsibly implement innovative approaches to meet their BSA/anti-money laundering compliance obligations.”
The pandemic environment is dynamic, unique, and evolving. There will no doubt continue to be communications and changes from regulatory authorities that present challenges for financial institutions in BSA/AML compliance. CRI’s CAMS certified BSA professionals stand ready to help guide you as new information is released.