I interpreted the 90 and then 30 day Beneficial Owner extensions for renewing business CDs to mean that we had another 30 days to get our ducks in a row when collecting Beneficial Owner information for renewing CDs, but that any CD renewing after September 8th would still require Beneficial Owner docs/certification.

I was just told by someone else that any CD that was opened prior to September 9th is exempt completely.

Which interpretation is correct?

I don't think we will know until the final guidance is released. I'm expecting either another extension or final guidance very soon as the current exemption expires in 2 days.

Thanks. I'm hoping that they will do away with the requirements for renewed CDs before a certain date, however I'm looking at as of today. How is the meaning of the extension being interpreted today? The way I interpreted above, or as I was told by someone else, also above?

I would have interpreted it to mean that if a CD matures after the grace period ends, you will have to obtain the B.O certification for each renewal after the grace period. But, as Adam said, we won't know the outcome until FinCEN says something.

FinCEN just said. And if I read it correctly, any Commercial CD, Loan, Credit Card or Safe Deposit Box opened prior to May 11 is exempt from obtaining Beneficial Ownership docs at renewal. Newly opened accounts, and renewals of accounts newly opened beginning May 11th must comply. I've been watching for the notice alllllllllll day!

I wouldn't go as far to say they are all exempt at renewal. They are exempt with a few qualifications.

 A rollover of a certificate of deposit that does not allow additional deposits during its term;
 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., a later payoff date is set) that does not require underwriting review and approval; and
 A renewal of a safe deposit box rental.

Our bank allows customers to deposit and w/draw during the grace period. If they do that, we will get a new BO form. If they don't elect to do that we won't get a new BO form. Does this seem reasonable with the new rule?

I am currently updating our policy and this is what I was thinking as well...if they do come in to do something, it is no longer just an automatic rollover...so would be considered an event. I am curious to hear what everyone else has to say!

I am not sure how strict they will interpret that rule. On its face it says a Rollover of a CD that DOES NOT ALLOW additional deposits during term. Do they mean the whole term? Do they mean allowing deposits during renewal? If the customer is in front of you to make a deposit/withdrawal it should be easy to obtain that information.

Given the strict wording of the exceptive relief, and the fact that the "grace period" of a CD is part of the term of the renewal term, I think you have to treat a partial withdrawal or an addition during that period or at any other time during the term of the CD as not covered by the exceptive relief, and get a B.O. certification when the depositor is a legal entity customer. Possible exception would be a withdrawal of accumulated interest at the maturity date, IMO.

Do you find any difference in the wording of the exception between a "product that does not allow" versus actual deposits/withdrawals during the renewal term?

If there are actual deposits or withdrawals during the renewal term it would be hard to argue that the product doesn't allow them.

I think I might not have explained what I was thinking very well. Just because a product "allows" a deposit does not mean that the customer will actually do so. The simple fact that a product "allows" it, giving the customer an option, would exclude most CDs from this relief.

However, since this is the case with almost every CD, I would venture to assume their intent was closer to the discussed definition. That is simply, if the customer comes in front of you to deposit during their grace period, collect the information. Otherwise, you're fine.

In regards to Commercial Loan Rollover and Commercial Loan Modifications, in which we get a new financial statement and re-underwrite based on the information provided, and it goes through an approval process. Do you think it’s a viable option to create a side-document (affidavit) where the Borrower signs off of stating that there have been no changes to the business structure (ownership percentages/structure/authorized signers)?

Or would it work to have them sign the Bank’s certification as if it were a new account. What would be a better option to present to regulators who would no doubt ask how the Financial Institution is documenting these processes?

FinCEN's intent was for us to ensure that we have updated information at the time of renewal. I don't see a problem with having the borrower attest to the information that is already on file. However, you need to be able to SHOW the borrower what you have on file in order for them to attest to the information. Your procedures should articulate how this will be done.

Others have taken the stance that it is just easier to have the customer sign a new CBO for each renewal. Currently, this is our approach for loans made prior to the effective date. We do not draw renewal documents without a CBO form.

For loans that renew and a CBO is already on file, we do not require a new CBO as our form includes the language in the certification section that the legal entity will notify the bank of any changes.

With respect to CDs, would not make this too complicated for employees.

A deposit or withdrawal during the grace period is an interaction with the customer and an opportunity to obtain a new CBO.

Shifting to Commercial Lines of Credit. What it an institution has credit clients who have a line, and the bank extends the line, with no change to a maturity date, and let's say in some cases, the loan is open-ended and has no hard maturity date. Since the only thing required by the Financial Institution is a fresh set of financials, do you need a Certification of Beneficial Ownership?

If you review those financials and could choose to terminate the line, then I would say that qualifies as a credit decision and you should obtain a CBO. Send the CBO with your letter requesting the financials.

Thanks,
I am starting to think that it's just the smart thing to just obtain is each time. If nothing has changed, it should essentially be just a copy with a new date and fresh signature.

Client has commercial loan with the Bank that originated prior to 5/11/18. Loan was up for renewal in June 2018 which prompted collection of new financial statements, underwriting based on the information provided, and credit approval. Beneficial Ownership Certification Form was collected. Form states the legal entity customer’s obligation and agreement to properly and immediately notify the bank of any changes to the certified beneficial ownership information that was previously provided. Loan is once again up for renewal, again prompting collection of new financial statements, underwriting based on the information provided, and credit approval. Does the Bank need to either document verbal confirmation of no change to beneficial ownership information previously collected or collect a new form OR neither due to client previously attesting they would notify the bank of any changes?

The attestation language came from FAQ #12 in FinCEN's April 2018 FAQs. Since the exceptive relief eliminated the requirement to obtain beneficial ownership certifications at the first renewal following 5/11/18 for automatically renewing accounts, it also eliminated the need for the attestation language.

If your loan is not considered automatically renewable as defined in the September 2018 Exceptive Relief, then you either need to document the verbal certification from the person opening the new account (renewal) or a new written certification depending on what your procedures require.

I interpret same but anticipate being challenged that FAQ 12 originally applied to both auto renewing and non-auto renewing loans for which the attestation language could be leveraged. Thoughts?

The sole purpose of the language was to give us an "out" for not obtaining a certification every time a legal entity account auto renewed. The requirement was eliminated altogether by exceptive relief. You can keep the language there if you want, but it no longer serves its intended purpose. FAQ 12 never applied to non-auto renewing loans. The text of the initial exceptive relief in May 2018 made that very clear even if it wasn't clear in the initial FAQ.

"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."

Who are you worried about challenging you? If an third party auditor, then look for a new firm because your auditor doesn't understand the regulatory requirements.

If an examiner, that's why we have a chain of command to escalate to an EIC, ombudsman, etc. if an examiner doesn't know the regulation.

Off topic, but I had a bank that spent several years continuing to put Regulation P notices on their bank statements because an examiner said the CFPB required that language (which it did in 2014) even though the law was changed in 2015. So this bank did more than what the regulation required for four years because they were "challenged" by an examiner that hadn't kept up with the changing requirements.

I get challenged almost every day either by a client or an examiner which is why I always strive to back my responses up with text from the regulation. It's part of what we do and I refuse to do more than what is required on the basis of the potential of being challenged.