We understand that FinCEN created a temporary exception from the requirement to collect beneficial ownership information for accounts that automatically rollover or renew. For commercial loan renewals, we review the file, gather appropriate financials, and produce renewal documents. Would this be considered “auto renewing” under the temporary exception?

No, we do not believe that the commercial loans you described would qualify as automatically renewing accounts under the temporary exception. You are correct that FinCEN has provided a ninety-day exception to the new customer due diligence rule’s beneficial ownership information collection requirements for accounts that automatically renew, such as CDs and loan accounts, provided that the accounts were established before May 11, 2018.

However, this “exceptive relief” extends only to accounts that automatically renew. In our view, the renewal process that you describe is not automatic, where your bank manually reviews and gathers loan documentation and customer financials and then produces renewal documentation. Consequently, we do not believe that your commercial loan renewal process qualifies for the temporary exception. We have reached out to FinCEN to confirm whether our understanding is correct but have not heard back from them as of this writing.

For resources related to our guidance, please see:

FIN-2018-R002 — Beneficial Ownership Requirements for Legal Entity Customers of Certain Financial Products and Services with Automatic Rollovers or Renewals (May 16, 2018) (“The Financial Crimes Enforcement Network (FinCEN) is issuing this ruling to provide a 90-day limited exceptive relief to covered financial institutions from the obligations of the Beneficial Ownership Requirements for Legal Entity Customers (31 CFR § 1010.230) (Beneficial Ownership Rule) with respect to certain financial products and services that automatically rollover or renew (i.e., certificate of deposit (CD) or loan accounts) and were established before the Beneficial Ownership Rule’s Applicability Date, May 11, 2018. This exception begins, retroactively, on May 11, 2018, and will expire on August 9, 2018.”)

FIN-2018-R002 — Beneficial Ownership Requirements for Legal Entity Customers of Certain Financial Products and Services with Automatic Rollovers or Renewals (May 16, 2018) (“FinCEN understands that some covered institutions have not treated such rollovers or renewals as new accounts and have established automatic processes to continue the banking relationship with the customer.”)

FIN-2018-G001 — FAQs Regarding Customer Due Diligence Requirements for Financial Institutions (April 3, 2018) (“Consistent with the definition of ‘account’ in the CIP rules . . . 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. . . .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.”)