Topic: Bank Secrecy Act & Anti-Money Laundering (BSA/AML)
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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?
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Yes, we believe that the commercial loans you described would qualify for FinCEN’s ninety-day exception to the new customer due diligence rule’s beneficial ownership information collection requirements for accounts that automatically renew, provided that the accounts were established before May 11, 2018. A representative from FinCEN informed us that the agency is taking a very…
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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?
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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…
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Does the $1,000 per person per day check cashing threshold in FinCEN’s definition of “money services business” apply to the customer or the store cashing the check? In other words, does a single customer of the check cashing store have to cash more than $1,000 in checks in a single day, or does the check cashing store need to cash more than $1,000 in checks from multiple customers in order for the store to meet FinCEN’s threshold for a check casher?
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The $1,000 dollar threshold applies to the check cashing store’s customer. FinCEN’s rule requires a business that provides check cashing services “in an amount greater than $1,000 for any person on any day in one or more transactions” to register as a money services business. In other words, if a store cashes checks for multiple…
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Under the beneficial ownership rule, how can we find out if a trust is a statutory trust “created by a filing with a Secretary of State or similar office”? Does the Secretary of State’s website contain listings?
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We recommend incorporating a question into your account opening questionnaire and customer due diligence (CDD) procedures that requires your customers to identify whether they are a statutory trust. Unlike ordinary trusts, statutory trusts (also known as “business trusts”) are formed by filing a certificate of trust or other filing with a public official, typically the…
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Do the beneficial ownership requirements in the new customer due diligence final rule that takes effect May 11, 2018, include any new signage requirements for banks? Our forms vendor called to promote signs that describe the rule’s requirements, but we were not aware that we needed new signs.
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No, the final customer due diligence rule that takes effect on May 11, 2018, does not include new signage requirements for banks, and it does not revise the existing customer identification program (CIP) signage requirements. Whether you wish to purchase and post signs regarding the new beneficial ownership requirements is a business decision for your…
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We are updating our customer due diligence (CDD) processes. Do the new beneficial ownership requirements cover Interest on Lawyer Trust Accounts (IOLTAs)?
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Yes, IOLTAs are covered by FinCEN’s new beneficial ownership requirements. But FinCEN has clarified that these accounts are treated as “intermediated accounts,” meaning that you need only obtain beneficial ownership information on the law firm or attorney holding such an account (the “intermediary”). Financial institutions are not required to obtain beneficial ownership information regarding the…
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Do we need to obtain certified beneficial ownership information under the new customer due diligence (CDD) rule every time a business customer renews a certificate of deposit? If so, how do we handle situations when a business customer with an automatically renewing CD refuses to provide this information at the time of renewal? Should we send new disclosures converting automatically renewing CDs to term CDs unless we receive the beneficial ownership information?
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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…
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An individual from Argentina would like a business loan to purchase an office building here in the U.S. The loan would be secured by a mortgage on the building, as well as by some funds that will be wired to us from Argentina. Are there any BSA concerns with making a loan to such a customer?
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Before engaging in a transaction with a foreign national, your bank should first check the Office of Foreign Assets Control (OFAC) database to ensure that the individual and his business are not specially designated nationals that your bank would be prohibited from dealing with. In addition, the FFIEC’s BSA/AML Examination Manual includes a concise description…
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Does FinCEN’s beneficial ownership rule apply to land trusts? Are land trusts considered a “legal entity”?
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No, we do not believe that FinCEN’s beneficial ownership requirements apply to land trusts. FinCEN’s beneficial ownership requirements apply only to “legal entity customers,” defined to include corporations, limited liability companies, general partnerships and any “other entity that is created by the filing of a public document with a Secretary of State or similar office.”…