No, your bank does not need to obtain certified beneficial ownership information each time a CD automatically renews. In a recently issued guidance, FinCEN stated that if a customer: (1) certifies their beneficial ownership information once after the new CDD rule takes effect, and (2) agrees to notify your bank of any changes when it certifies this information, that agreement will suffice as confirmation of the customer’s beneficial ownership information for future CD renewals.

While FinCEN’s recent guidance confirmed that CD renewals are considered “new accounts” — triggering the beneficial ownership certification requirements for legal entity customers under the new CDD rule — it also clarifies that banks may satisfy these requirements by certifying beneficial ownership information the first time a legal entity customer’s CD is renewed after the new CDD rule takes effect on May 11, 2018. A bank is not required to collect certified beneficial ownership information again for subsequent renewals if: (1) the customer and the financial service or product remain the same, (2) the customer certifies or confirms that the beneficial ownership information previously obtained is accurate and up-to-date, and (3) the institution has no knowledge of facts that would reasonably call into question the reliability of the information. Importantly, FinCEN also states that if a customer has agreed to notify your bank of any changes when it first certifies its beneficial ownership information, that agreement can serve as the required certification for as long as the CD is outstanding.

For legal entity customers that refuse to certify their beneficial ownership information the first time a CD is renewed after May 11, 2018, you may wish to reclassify those CDs as single-term, non-renewing accounts (in such case, you should provide 30 days advance notice of the change to all your business CD customers, pursuant to Regulation DD). You also could point out to your customers that if they decline to renew their CD accounts, they likely will have to provide this information anyway to whichever institution they use to open a new CD account.

For resources related to our guidance, please see:

• FinCEN FAQs Regarding Customer Due Diligence Requirements (April 3, 2018)  (Question 12: “Are financial institutions required to have their legal entity customers certify the beneficial owners for existing customers during the course of a financial product renewal (e.g., a loan renewal or certificate of deposit)? A. Yes. Consistent with the definition of ‘account’ in the CIP rules and subsequent interagency guidance, each time a loan is renewed or a certificate of deposit is rolled over, the bank establishes another formal banking relationship and a new account is established. Covered financial institutions are required to obtain information on the beneficial owners of a legal entity that opens a new account, meaning (in the case of a bank) for each new formal banking relationship established, even if the legal entity is an existing customer. For financial services or products established before May 11, 2018, covered financial institutions must obtain certified beneficial ownership information of the legal entity customers of such products and services at the time of the first renewal following that date. At the time of each subsequent renewal, to the extent that the legal entity customer and the financial service or product (e.g., loan or CD) remains the same, the customer certifies or confirms that the beneficial ownership information previously obtained is accurate and up-to-date, and the institution has no knowledge of facts that would reasonably call into question the reliability of the information, the financial institution would not be required to collect the beneficial ownership information again. In the case of a loan renewal or CD rollover, because we understand that these products are not generally treated as new accounts by the industry and the risk of money laundering is very low, if at the time the customer certifies its beneficial ownership information, it also agrees to notify the financial institution of any change in such information, such agreement can be considered the certification or confirmation from the customer and should be documented and maintained as such, so long as the loan or CD is outstanding.”)

• FinCEN Final Rule, 81 Fed. Reg. 29397, 29451 (Effective May 18, 2018) (New 31 CFR 1010.230(b): “With respect to legal entity customers, the covered financial institution's customer due diligence procedures shall enable the institution to: (1) Identify the beneficial owner(s) of each legal entity customer at the time a new account is opened, unless the customer is otherwise excluded pursuant to paragraph (e) of this section or the account is exempted pursuant to paragraph (h) of this section. A covered financial institution may accomplish this either by obtaining a certification in the form of appendix A of this section from the individual opening the account on behalf of the legal entity customer, or by obtaining from the individual the information required by the form by another means, provided the individual certifies, to the best of the individual's knowledge, the accuracy of the information; . . .”)

• FinCEN Final Rule, 81 Fed. Reg. 29397, 29452 (Effective May 18, 2018) (New 31 CFR 1010.230(g): “For the purposes of this section, new account means each account opened at a covered financial institution by a legal entity customer on or after the applicability date.”)

• Interagency FAQs, Customer Identification Program Rule (April 28, 2005) (Question 1: “A loan and a time deposit are each an “account” for purposes of the CIP rule. How do the requirements of the CIP rule apply to a loan that is renewed, or a certificate of deposit that is rolled over? Answer . . . For purposes of the CIP rule, each time a loan is renewed or a certificate of deposit is rolled over, the bank establishes another formal banking relationship and a new account is established. . . .”)

• Regulation DD, 12 CFR 1030.4(b)(6)(i)  (“Account disclosures shall include the following, as applicable: . . . The maturity date.”)

• Regulation DD, 12 CFR 1030.5(a) (“A depository institution shall give advance notice to affected consumers of any change in a term required to be disclosed under § 1030.4(b) of this part if the change may reduce the annual percentage yield or adversely affect the consumer. The notice shall include the effective date of the change. The notice shall be mailed or delivered at least 30 calendar days before the effective date of the change.”)