30-day ‘beneficial ownership’ rule delay under CDD set to expire Saturday

Some “exceptive relief” for financial institutions from obligations of “beneficial ownership” rules of customer due diligence requirements (CDD) expires Saturday under a recent extension issued by federal law enforcement in August. That is, unless the effective date – already extended once – is again changed.

The current, Sept. 8 deadline for compliance with the beneficial ownership rule, issued by the Financial Crimes Enforcement Network (FinCEN), applies to accounts that automatically roll over or renew, such as certificates of deposit or loan accounts.

The relief was first issued May 16 retroactively for accounts that were established before the beneficial ownership rule’s original applicability date of May 11, 2018. FinCEN issued a 90-day limited exception then in order to determine whether, and to what extent, a further exception would be appropriate for such products and services. That exception was set to expire Aug. 9.

However, on Aug. 8, the law enforcement agency extended the effective date an additional 30 days. It also made clear that the exception could be extended, modified or revoked at FinCEN’s discretion.

“FinCEN is extending the limited exception for an additional 30 days, up to and including September 8, 2018, from the obligations of the Beneficial Ownership Rule for rollover or renewal of certain financial products and services (i.e., certificate of deposit or loan accounts) that were established before May 11, 2018 to further consider the issue,” the agency said in its announcement.

FinCEN first released an advance notice of proposed rulemaking (ANPR) on the issue in 2012; that ANPR generated 90 comment letters. Five public hearings followed, and a notice of proposed rulemaking was released in 2014. In response to comments (141 were received), FinCEN extended the planned compliance period from one year to two years. It also published two sets of FAQs; the more recent one was released in April.

Extension of Limited Exception from Beneficial Ownership Requirements for Legal Entity Customers of Certain Financial Products and Services with Rollovers and Renewals