Exercising “exceptive” relief authority, FinCEN has extended permanent relief from the beneficial ownership requirements of its new Customer Due Diligence (CDD) rule to existing autorenewing CDs and safe deposit boxes, as well as existing autorenewing commercial lines of credit and credit cards that do not require underwriting review and approval. FinCEN reasoned that these products pose such a low risk for money laundering and terrorist financing activity that the benefits of requiring the collection of this information does not outweigh the impacts of compliance on financial institutions and their customers. Specifically, institutions need not treat rollovers or renewals of such products as “new accounts” requiring the collection of the beneficial ownership elements of the CDD rule, whether or not the initial accounts were established prior to the rule’s May 11, 2018 effective date.
FinCEN previously issued temporary relief to autorenewing CDs and loan products established prior to May 11, 2018, and in a second release extended this relief through September 9, 2018. The new release both extends this treatment indefinitely and expands it to include certain safe deposit box rentals, such that the exception applies now to any of the following occurring on or after May 11, 2018:
- A rollover of a CD, defined as a deposit account that has a specified maturity date, prior to which funds cannot be withdrawn without the imposition of a penalty, and which does not permit the customer to add funds;
- A renewal, modification, or extension of a loan (e.g., setting a later payoff date) that does not require underwriting review and approval;
- A renewal, modification, or extension of a commercial line of credit or credit card account (e.g., setting a later payoff date) that does not require underwriting review and approval; and
- A renewal of a safe deposit box rental (e.g., upon the automatic deduction of the rental fee as agreed-upon between a bank and its customer).
FinCEN is careful in this September 7, 2018, release to explain that it does not relieve institutions of the obligation to collect and verify the identity of beneficial owners of legal entity customers where the initial account opening of such accounts occurs on or after May 11, 2018. It does mean, however, that institutions need not collect beneficial ownership information for certain older accounts of the types described above (those opened prior to May 11, 2018) solely because they are rolled over or renewed.