FinCEN highlights 2 FAQs from SBA regarding BSA compliance for Paycheck Protection Program lenders

Two frequently asked questions about Bank Secrecy Act (BSA) compliance requirements of lenders participating in the Small Business Administration’s (SBA) Paycheck Protection Program (PPP), created to help small businesses manage through the coronavirus crisis, were republished this month by Treasury’s financial crimes unit.

The issues highlighted by the Financial Crimes Enforcement Network (FinCEN) address requirements for the collection and verification of beneficial ownership information on new and existing accounts under FinCEN’s customer due diligence (CDD) regulation. (The SBA’s lengthier FAQ document is linked lower on this page.) The related FAQs are as follows (footnotes and other references removed):

1. Question: Are PPP loans for existing customers considered new accounts for FinCEN Rule CDD purposes? Are lenders required to collect, certify, or verify beneficial ownership information in accordance with the rule requirements for existing customers?

Answer: If the PPP loan is being made to an existing customer and the necessary information was previously verified, you do not need to re-verify the information.

Furthermore, if federally insured depository institutions and federally insured credit unions eligible to participate in the PPP program have not yet collected beneficial ownership information on existing customers, such institutions do not need to collect and verify beneficial ownership information for those customers applying for new PPP loans, unless otherwise indicated by the lender’s risk-based approach to BSA compliance.

2. Question: Does the information lenders are required to collect from PPP applicants regarding every owner who has a 20% or greater ownership stake in the applicant business (i.e., owner name, title, ownership %, TIN, and address) satisfy a lender’s obligation to collect beneficial ownership information (which has a 25% ownership threshold) under the Bank Secrecy Act?

Answer: For lenders with existing customers: With respect to collecting beneficial ownership information for owners holding a 20% or greater ownership interest, if the PPP loan is being made to an existing customer and the lender previously verified the necessary information, the lender does not need to re-verify the information. Furthermore, if federally insured depository institutions and federally insured credit unions eligible to participate in the PPP program have not yet collected such beneficial ownership information on existing customers, such institutions do not need to collect and verify beneficial ownership information for those customers applying for new PPP loans, unless otherwise indicated by the lender’s risk-based approach to Bank Secrecy Act (BSA) compliance.

For lenders with new customers: For new customers, the lender’s collection of the following information from all natural persons with a 20% or greater ownership stake in the applicant business will be deemed to satisfy applicable BSA requirements and FinCEN regulations governing the collection of beneficial ownership information: owner name, title, ownership %, TIN, address, and date of birth. If any ownership interest of 20% or greater in the applicant business belongs to a business or other legal entity, lenders will need to collect appropriate beneficial ownership information for that entity. Decisions regarding further verification of beneficial ownership information collected from new customers should be made pursuant to the lender’s risk-based approach to BSA compliance.

Paycheck Protection Program Frequently Asked Questions (as of April 13, 2020)

Full set of FAQs from SBA on the Paycheck Protection Program

FinCEN final rule on CDD

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