OCC supports FinCEN view that re-verification for PPP loans not required under anti-money laundering rules

Loans made under a loan program to protect workers’ earnings (the Paycheck Protection Program, PPP) will not require re-verification under applicable anti-money laundering laws unless otherwise indicated by the financial institution’s risk-based approach to compliance with the rules, the Treasury’s chief anti-money laundering law enforcement agency said Friday.

On Tuesday, the federal regulator of national banks said it was in support of the position taken by the Financial Crimes Enforcement Network (FinCEN).

Under the notice issued late last week, FinCEN updated a March 16 statement urging financial institutions to keep the agency (and their functional regulators) notified if the institutions think they cannot meet Bank Secrecy Act/anti-money laundering (BSA/AML) reporting deadlines. In Friday’s update, FinCEN said it was “committed to promoting the success of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), “including the need to facilitate expeditious disbursal of CARES Act funds.” The PPP loan program was contained in the CARES Act, which was signed into law March 27.

In addition to not requiring re-verification under BSA/AML laws for PPP lenders, FinCEN said that, for non-PPP loans, financial institutions should look to FinCEN’s Sept. 7, 2018, ruling (FIN-2018-R004) offering certain exceptive relief to beneficial ownership requirements. “To the extent that renewal, modification, restructuring, or extension for existing legal entity customers falls outside of the scope of that ruling, FinCEN recognizes that a risk-based approach taken by financial institutions may result in reasonable delays in compliance,” the agency said in its update.

Tuesday, the Office of the Comptroller of the Currency (OCC) issued a bulletin saying that “when evaluating a bank’s BSA compliance program, the OCC will consider the actions taken by banks to protect and assist employees, customers and others in response to the COVID-19 pandemic, including any reasonable delays in BSA report filings, beneficial ownership verification or re-verification requirements, and other risk management processes.”

Also outlined in FinCEN’s updated notice last week:

  • FinCEN will continue outreach to regulatory partners and financial institutions to ensure risk-based compliance with the BSA, and FinCEN will issue additional new information as appropriate.
  • The agency has suspended implementation of its Feb. 6, 2020, ruling (FIN-2020-R001) on CTR filing obligations when reporting transactions involving sole proprietorships and entities operating under a “doing business as” (DBA) name until further notice. “FinCEN will issue further information on these types of CTR filings at an appropriate time with reasonable implementation periods,” the agency said. “Until such issuance, financial institutions should continue to report transactions involving sole proprietorships and DBAs under prior practice. Those financial institutions that have already made the necessary changes to comply with the 2020 Ruling need not revert to prior practice, and may report CTRs in accordance with the now-suspended ruling.”
  • A new COVID-19-specific online contact mechanism, via a specific drop-down category, has been created on the agency’s website for financial institutions to communicate to FinCEN their COVID-19-related concerns while adhering to their BSA obligations. Financial institutions that wish to communicate such COVID-19-related concerns to FinCEN must go to FinCEN.gov, click on “Need Assistance,” and select “COVID19” in the subject drop-down list, the agency said.
  • The agency said it encourages financial institutions to “consider, evaluate, and, where appropriate, responsibly implement innovative approaches to meet their BSA/anti-money laundering compliance obligations, in order to further strengthen the financial system against illicit financial activity and other related fraud.”

In its bulletin, the OCC also noted that it will consider unusual circumstances faced by supervised institutions during the COVID-19 crisis when reviewing BSA compliance programs and determining any supervisory response. “As needed, the OCC will work with affected banks to reduce burden when scheduling examinations or inspections, including making greater use of off-site reviews, consistent with applicable legal and regulatory requirements,” the agency said. “The OCC also will work with banks that may experience problems fulfilling their reporting responsibilities and will take into account each bank’s particular circumstances. The OCC encourages banks to contact their examiners regarding any BSA compliance concerns.”

OCC Bulletin 2020-34: Bank Secrecy Act/Anti-Money Laundering: OCC Supports FinCEN’s Regulatory Relief and Risk-Based Approach for Financial Institution Compliance in Response to COVID-19