New Bank Secrecy Act Compliance Guidelines Available

FinCEN will continue outreach to regulatory partners and financial institutions to ensure risk-based compliance with the BSA and issue additional new information as appropriate.

4/7/2020

The Financial Crimes Enforcement Network has released information to assist financial institutions with the Bank Secrecy Act (BSA) obligations during the COVID-19 pandemic.

Compliance with BSA Obligations

Compliance with the BSA remains crucial to protecting our national security by combating money laundering and related crimes, including terrorism and its financing. FinCEN expects financial institutions to continue following a risk-based approach and diligently adhere to their BSA obligations. FinCEN also appreciates that financial institutions are taking actions to protect employees, their families, and others in response to COVID-19, which has created challenges in meeting certain BSA obligations, including the timing requirements for certain BSA report filings. FinCEN will continue outreach to regulatory partners and financial institutions to ensure risk-based compliance with the BSA, and FinCEN will issue additional new information as appropriate.

Beneficial Ownership Information Collection Requirements for Existing Customers

One of the primary components of the CARES Act is the Paycheck Protection Program (PPP). For eligible, federally insured depository institutions and federally insured credit unions, PPP loans for existing customers will not require re-verification under applicable BSA requirements, unless otherwise indicated by the institution’s risk-based approach to BSA compliance.

For non-PPP loans, FinCEN reminds financial institutions of FinCEN’s Sept. 7, 2018, ruling (FIN-2018-R004) offering certain exceptive relief to beneficial ownership requirements. To the extent that renewal, modification, restructuring, or extension for existing legal entity customers falls outside of the scope of that ruling, FinCEN recognizes that a risk-based approach taken by financial institutions may result in reasonable delays in compliance.

FinCEN will continue to assess reasonable risk-based approaches to BSA obligations and will issue further information, as appropriate, particularly as the CARES Act is implemented. 

BSA Reporting Obligations and Updates to Currency Transaction Report (CTR) Filing Obligations

FinCEN has heard from certain financial institutions and trade associations for financial institutions about difficulties in meeting certain BSA obligations, including the timing requirements for certain BSA report filings. In response to concerns regarding certain timing requirements of BSA filings, FinCEN recognizes that certain regulatory timing requirements with regard to BSA filings may be challenging during the COVID-19 pandemic and that there may be some reasonable delays in compliance. 

FinCEN hereby suspends implementation of the Feb. 6 ruling (FIN-2020-R001) on CTR filing obligations when reporting transactions involving sole proprietorships and entities operating under a “doing business as” (DBA) name (the “2020 Ruling”) until further notice. FinCEN will issue further information on these types of CTR filings at an appropriate time with reasonable implementation periods. Until such issuance, financial institutions should continue to report transactions involving sole proprietorships and DBAs under prior practice. Those financial institutions that have already made the necessary changes to comply with the 2020 Ruling need not revert to prior practice, and may report CTRs in accordance with the now-suspended ruling.

New FinCEN COVID-19 Online Contact Mechanism

FinCEN has created a COVID-19-specific online contact mechanism, via a specific drop-down category, for financial institutions to communicate to FinCEN COVID-19-related concerns while adhering to their BSA obligations. Financial institutions that wish to communicate such COVID-19-related concerns to FinCEN must go to www.FinCEN.gov, click on “Need Assistance,” and select “COVID19” in the subject drop-down list. Such COVID-19-related communications are strongly encouraged but not required. FinCEN will review COVID-19-related communications. Depending on the volume of such communications, however, FinCEN may only respond via an automated message confirming receipt to communications regarding delays in filing of BSA reports due to COVID-19. FinCEN also encourages financial institutions to contact their functional regulator(s) or other BSA examining authority as soon as practicable if a financial institution has BSA compliance concerns because of the COVID-19 pandemic. Financial institutions are encouraged to keep FinCEN and their functional regulator(s) or other BSA examining authority informed as their circumstances change. 

Question of the Week

Q. Is there a requirement that the credit union match the names on a tax refund received through direct deposit to the name(s) on the account?

A. NACHA does not require financial institutions to match names on incoming ACHs. It is important that credit unions do not try to change the intended destination if they do discover the names don’t match because this could put them on the hook for any losses associated with the transaction. However, if the credit union becomes aware of a situation where a tax return has gone to the wrong account, they should try to return the funds to the IRS if they are still available.

FinCEN has released some guidance that can help financial institutions detect tax return fraud. FinCEN recognizes that there is a growing issue of tax refund scams that often are a result of identity theft. FinCEN put together a list of red flags that credit unions should carefully review to determine if any of their account holders might be attempting to commit fraud.

Additionally, if a credit union does suspect tax return fraud, they should look to FinCEN’s guidance on how to prepare a suspicious activity report (SAR).

Resources

FinCEN Guidance FIN-2013-A001

Legal Briefs

National Credit Union Administration (NCUA)

Offsite Examination and Supervision Approach
The NCUA has mandated a strict off-site policy for all employees and contracted support staff. All NCUA examinations will take place offsite through May 1, and the off-site policy will remain in effect until further notice.

Grants, Loans Available to Low-Income Credit Unions for COVID-19 Response
Federally insured, low-income-designated credit unions can request grants and loans from the NCUA to assist members, businesses, and communities experiencing economic hardships due to the COVID-19 pandemic.

Federal and State Agencies Encourage Mortgage Servicers to Work with Struggling Homeowners Affected by COVID-19
The federal financial institution regulatory agencies and the state financial regulators issued a joint policy statement providing needed regulatory flexibility to enable mortgage servicers to work with struggling consumers affected by the COVID-19 emergency.

SBA Loan Programs to Help Small Businesses and Members During the COVID-19 Pandemic 
The NCUA issued Letter to Credit Unions 20-CU-06 to provide an overview for credit unions of the Small Business Administration (SBA) Paycheck Protection Program and COVID-19 Economic Injury Disaster Loans.  The NCUA states that it will not criticize credit unions’ good faith efforts to prudently use the SBA programs with members affected by COVID-19, but stresses that credit unions and their members should review the interim final rule and any subsequent changes. 

Consumer Financial Protection Bureau (CFPB)

Mortgage Servicing Rules FAQs Related to the COVID-19 Emergency
The CFPB released additional compliance guidance to provide mortgage servicers with enhanced clarity about existing flexibility in the mortgage servicing rules that credit unions can use to help members during the current emergency.

Federal Crimes Enforcement Network (FinCEN) 

Further Information to Financial Institutions in Response to COVID-19 Pandemic 

FinCEN provided additional information to assist financial institutions in complying with BSA obligations during the COVID-19 pandemic. 

Washington State Department of Financial Institutions (DFI)

COVID-19 Guidance to Mortgage Services
The DFI has guidance for mortgage servicers to work with mortgage borrowers who demonstrate they are not able to make timely payments due to impact caused by the COVID-19 emergency. Servicers are urged to take reasonable and prudent actions, subject to the requirements of any related guarantees or insurance policies. The guidance provides a list of actions that mortgage servicers may consider taking.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of March 26. The last update prior to this was March 19.

Questions? Contact the Compliance Hotline: 1.800.546.4465; [email protected]