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FinCEN Clarifies Beneficial Ownership Regarding PPP Loans

Terri Luttrell, CAMS-Audit, CFCS
April 14, 2020
Read Time: 0 min

On April 13, 2020, FinCEN issued an update of their joint FAQs with the Small Business Administration (SBA) regarding the implementation of the Paycheck Protection Program (PPP) which was established by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Specifically, FinCEN clarified a section of the FAQs regarding Bank Secrecy Act (BSA) beneficial ownership requirements.

FinCEN provides guidance around Beneficial Ownership requirements

The following BSA related guidance was issued:

  • If a PPP loan is made to an existing customer and the necessary beneficial ownership information was previously verified, you do not need to re-verify the information.
  • If beneficial ownership information has NOT been previously verified on an existing customer, they do not need to collect and verify the beneficial ownership information, unless otherwise indicated by the lender’s risk-based approach to BSA compliance.
  • For new customers, the lender must collect beneficial ownership information on all-natural persons with a 20% or greater ownership in the applicant business. The required information is as follows:
    • Name
    • Title
    • Ownership %
    • TIN
    • Address
    • Date of Birth
  • If a business is a 20% or more beneficial owner of the applicant business, beneficial ownership information would be required on the entity.
  • Beneficial ownership further verification should be made in accordance with the lender’s risk-based BSA Policy

Lenders should add PPP addition to their Board-approved BSA policy

As the term risk-based approach leaves room for differing interpretations, it would be prudent for the lender to add a PPP addition to their Board approved BSA Policy. This would ensure that your risk-based decisions are supported. FinCEN states in this update that the U.S. Government will not challenge lender PPP actions that conform to the above guidance or any other future guidance.

FinCEN is the administrator of the BSA and along with the SBA will continue to update the FAQs with any additional BSA-related guidance involving the PPP. For the most recent FAQs document, click here. For the FinCEN update, click here.

Stay up-to-date on the latest news surrounding the coronavirus.

learn more

For more information on the CARES Act and the Paycheck Protection Program, visit our resource page. Stay up-to-date with all of the changes and concerns around coronavirus and your institution on our coronavirus resource page. 

About the Author

Terri Luttrell, CAMS-Audit, CFCS

Compliance and Engagement Director
Terri Luttrell is a seasoned AML professional and former director and AML/OFAC officer with over 20 years in the banking industry, working both in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size.

Full Bio

About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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