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#2233974 - 03/31/20 03:36 PM CAREs ACT = PayCheck Protection Program
MollyM Offline
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Good Morning!

Has anyone seen any guidance in regards to CIP and BOC requirements for the SBA loans that we are about to be hit with as part of the CARES Package? I have not - my loan executives are pushing me to find out if they will have to do BOC and CIP. If yes, do you CIP the owners too or just the business itself?

Thanks.
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#2233984 - 03/31/20 04:16 PM Re: CAREs ACT = PayCheck Protection Program MollyM
BrianC Offline
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There are no changes to BSA requirements for CIP or beneficial ownership. If your customer is a legal entity, you perform CIP on your customer and obtain a certification of beneficial ownership.

You follow your current procedures just like you would for any other loan.
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#2233987 - 03/31/20 04:41 PM Re: CAREs ACT = PayCheck Protection Program MollyM
MollyM Offline
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Exactly what I thought - thanks Brian. I will continue to watch notifications as I am sure everyone else will as well! Stay safe and God Bless.
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#2234017 - 03/31/20 09:41 PM Re: CAREs ACT = PayCheck Protection Program MollyM
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So how many are actually using the application provided by the SBA? It does not gather controlling party and does not gather ID information for owners (we use non documentary).
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#2234055 - 04/01/20 03:45 PM Re: CAREs ACT = PayCheck Protection Program MollyM
MollyM Offline
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Update for anyone who is following this thread.

The SBA loan app form has TWO - yes only TWO - lines for ownership of 20% or more, never mind they could have up to five. We are created other page(s) as attachments that gather additional ownership info and DOB for owners which is also not included on the app (of course). Also, we are adding other sections for gathering CIP that is missing on the app - such as DOB and home address for sole proprietors. We will be accepting apps online so we are building in "check points" to force them to complete needed sections based upon entity type and other choices made and for the app to skip sections not needed.

Thanks.
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#2234175 - 04/03/20 12:31 AM Re: CAREs ACT = PayCheck Protection Program MollyM
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It appears from the just released guidance, that you would not need to re-verify BSA related information (assuming they mean CIP and BO here) if your risk based program allows;

3(b)(iv)(I)
"Federally insured depository institutions and federally insured credit unions should continue to follow their existing BSA protocols when making PPP loans to either new or existing customers who are eligible borrowers under the PPP. PPP loans for existing customers will not require reverification under applicable BSA requirements, unless otherwise indicated by the institution’s risk-based approach to BSA compliance."

I assume you could make an exceptive adjustment to your existing program?

[url=https://home.treasury.gov/system/files/136/PPP--IFRN%20FINAL.pdf][/url]
Last edited by Kaos; 04/03/20 03:41 AM.
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#2234197 - 04/03/20 03:52 PM Re: CAREs ACT = PayCheck Protection Program Kaos
sammylou Offline
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What steps does everyone count in "reverification" relative to either CIP or BO requirements? What would this permit us to skip on existing customers?
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#2234198 - 04/03/20 04:04 PM Re: CAREs ACT = PayCheck Protection Program MollyM
Justin Case Offline
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We are wondering about this also. For existing customers, we wouldn't need to re-CIP them but we would normally obtain an updated Beneficial Ownership form. But as I'm reading the vague language, could it be interpreted that if we have an existing customer with a Beneficial Ownership form on file, that we would not have to obtain a new one (or a signed one attesting that the information on the form hasn't changed)?
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#2234199 - 04/03/20 04:06 PM Re: CAREs ACT = PayCheck Protection Program MollyM
sammylou Offline
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Agree on the CIP. Same as you - no new BO Cert required (nor have them resign an existing)? That feels like the cert. Is the "re-verification" the whole - is their ID info still up to date?
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#2234223 - 04/03/20 06:14 PM Re: CAREs ACT = PayCheck Protection Program MollyM
thisisme08 Offline
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Here is the response I received from FinCEN;

"The CIP and CDD/beneficial ownership requirements of an institution must include risk-based procedures for verifying the identity of each customer and beneficial owners of legal entity customers, respectively. The portion of the guidance you are referring to explains that institutions must consider its existing risk-based procedures contained within its CIP/CDD when determining whether re-verification of existing customers who were previously verified is necessary. In other words, although the guidance outlined within the terms of SBA's PPP may not require institutions to re-verify all applicants who are previously-verified-existing customers, it does not relinquish an institution from the requirement to rely on its risk-based procedures, as there may be instances when re-verification of an existing customer may be necessary."

I read this as we are not getting a "because of COVID" excuse and you need to have to have a procedure in place with whatever you choose to do. Whether that is the right procedure or not may have to wait until your next exam.
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#2234225 - 04/03/20 06:23 PM Re: CAREs ACT = PayCheck Protection Program MollyM
sammylou Offline
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Thank you thisisme08. Do you take the "reverification" step to be things like reviewing a copy of the drivers licenses again for each of the BOs? We would still have to have the control person sign a BO Cert, of sign something saying the old BO Cert is still valid, right? I have never read the "risk based procedures" piece to let us NOT get a BO Cert (or something saying it's still valid). Do you agree?
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#2234237 - 04/03/20 07:52 PM Re: CAREs ACT = PayCheck Protection Program MollyM
thisisme08 Offline
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Exactly...but like Justin Case posted above, I really wanted them to answer the second part of my question of do we need to do anything at all, as long as it is cited as 'risk based' in our procedures. Personally, with the guidance the regulators have provided for other areas which amounts to "hurry up and help your customers", I feel like as long as we have UBO on file, than there should be no need to re-cert in any case.

My current plan is to allow for our assigned PPP team to accept verbal UBO verification (i.e. Customer X, can you please verify that A,B,C are own your Biz and that C is the Control person?). For the obvious reasons, I dislike verbal procedures but at least the PPP team will have to document that on todays date at 10AM they spoke with Customer X to verify that the UBO was still correct (and if it wasn't, then they will update).

For re-verification, I took that to mean re-performing CIP and OFAC. As those are not things we do for existing customers who wish to open new accounts, I will not have to modify that procedure at all.

***Side note for everyone-with many DMV/County Clerk office's shutdown, check and see if your state has authorized an exception to expired driver licenses. That is another thing to be communicated to front line staff as per the state, that 'expired' D/L may in fact still be valid for the duration of the crisis or whatever timeframe they have specified.***
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#2234247 - 04/03/20 09:20 PM Re: CAREs ACT = PayCheck Protection Program MollyM
Justin Case Offline
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Here's an excerpt from guidance put out by FinCEN today:

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 September 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.
---------------------------------------------------------------------

With the addition of the heading the information falls under, we are interpreting that to mean if we are doing a PPP loan to an existing customer and we have a Beneficial Ownership form on file for them, we do not have to collect a new form or ask them to review the information (which is also inline with our CIP/BO procedures). If the PPP loan is going to an existing customer who does NOT have a Beneficial Ownership form on file, we will be collecting that form and associated information in its entirety.
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#2234253 - 04/03/20 10:34 PM Re: CAREs ACT = PayCheck Protection Program MollyM
Marmaduchess Offline
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We have not done any lending that isn't face-to-face but with the lobbies closed, what are some recommendations for CIP/EDD on non-customer. The businesses would be easier to CIP/EDD than the person asking for the loan. How do we know they are who they say are without face-to-face? We also haven't implemented online account opening so nothing in our program deals with this. Appreciate any help!

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#2234274 - 04/06/20 12:58 PM Re: CAREs ACT = PayCheck Protection Program Justin Case
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Originally Posted by Justin Case

With the addition of the heading the information falls under, we are interpreting that to mean if we are doing a PPP loan to an existing customer and we have a Beneficial Ownership form on file for them, we do not have to collect a new form or ask them to review the information (which is also inline with our CIP/BO procedures). If the PPP loan is going to an existing customer who does NOT have a Beneficial Ownership form on file, we will be collecting that form and associated information in its entirety.


I have pending questions out to FinCEN on those two exact points. I asked them the following:

1. Since the SBA requires identification of 20%+ owners along with ownership percentage, does an Institution need to obtain a new Beneficial Ownership Certification Form if the information on the borrower application differs from the BO Certification Form on file?

2. If an existing customer's previous account opening predates BO requirements, are Institutions required to obtain a BO Certification Form?

I'll gladly share the response once I hear back.
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#2234275 - 04/06/20 01:03 PM Re: CAREs ACT = PayCheck Protection Program MollyM
sammylou Offline
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Justin Case - Pre-COVID, PPP, etc.... existing customer has BO Cert on file from their last loan. You do a new loan for them, what do your CIP / BO procedures require for that loan relative to the BO Cert?
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#2234279 - 04/06/20 01:48 PM Re: CAREs ACT = PayCheck Protection Program MollyM
thisisme08 Offline
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Quote function is not working for me so copy/paste it is: "With the addition of the heading the information falls under, we are interpreting that to mean if we are doing a PPP loan to an existing customer and we have a Beneficial Ownership form on file for them, we do not have to collect a new form or ask them to review the information (which is also inline with our CIP/BO procedures). If the PPP loan is going to an existing customer who does NOT have a Beneficial Ownership form on file, we will be collecting that form and associated information in its entirety."

^This is how we are interpreting the guidance as well.

In my head, I have this down as four ways in which BenOwn is applicable;
1. Non-Customer seeking a loan (PPP or regular) = full BSA program + BenOwn
2. Current Customer seeking a PPP loan and who has BenOwn on file = no additional steps to take
3. Current Customer seeking a PPP loan and who does not have BenOwn on file = need to gather BenOwn
4. Current Customer seeing a regular loan = follow regular procedures regarding your re-certification process but they are allowing for reasonable delays (remember to document why the delay occurred)
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#2234290 - 04/06/20 03:21 PM Re: CAREs ACT = PayCheck Protection Program thisisme08
WIBanker91 Offline
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In our case our policy state that when we are extending a new loan we will either obtain the full Beneficial Owner information or a certification that nothing has changed. I feel like I have to go with obtaining the certification.

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#2234335 - 04/07/20 01:31 PM Re: CAREs ACT = PayCheck Protection Program MollyM
MollyM Offline
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Loan team at my bank in rush to get it out online to accept applications. I had suggested looking at the core first and only getting BOC on those new customers (we are taking from non customers). Was told "no, we do not have time for that.....we will just get it". Too late to change procedure now. We are conducting manual OFAC on business, owners and CP. We are conducting ID verifications manually too on owners and CP.

Later
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#2234336 - 04/07/20 01:32 PM Re: CAREs ACT = PayCheck Protection Program WIBanker91
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SBA FAQ 18 seems to stretch the position FinCEN put out in its guidance issued on 4/3. They solely noted that FIs would not require re-verification. Thoughts?

• From the SBA FAQs
18. Question: Are PPP loans for existing customers considered new accounts for FinCEN Rule CDD purposes? Are lenders required to collect, certify, or verify beneficial ownership information in accordance with the rule requirements for existing customers?
Answer: If the PPP loan is being made to an existing customer and the necessary information was previously verified, you do not need to re-verify the information. Furthermore, if federally insured depository institutions and federally insured credit unions eligible to participate in the PPP program have not yet collected beneficial ownership information on existing customers, such institutions do not need to collect and
verify beneficial ownership information for those customers applying for new PPP loans
, unless otherwise indicated by the lender’s risk-based approach to BSA compliance.

• From FinCEN Guidance
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 September 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.

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#2234346 - 04/07/20 02:47 PM Re: CAREs ACT = PayCheck Protection Program MollyM
Justin Case Offline
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We are not going to require the Beneficial Ownership form for PPP loans based on the SBA FAQ guidance.
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#2234353 - 04/07/20 04:18 PM Re: CAREs ACT = PayCheck Protection Program Justin Case
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It seems that SBA, in consultation with the Department of the Treasury, of which FinCEN is one of their primary agencies, expanded on the initial relief put forth.

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#2234356 - 04/07/20 04:42 PM Re: CAREs ACT = PayCheck Protection Program MollyM
terpsfan Offline
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Is there an issue if you policy does not exclude these and you do not have time to modify policy?

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#2234367 - 04/07/20 05:44 PM Re: CAREs ACT = PayCheck Protection Program MollyM
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We are collecting ownership for new and existing customers. It is a risk based policy and our policy calls for its collection. Its part of the onboarding process so my people are used to it.

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#2234419 - 04/08/20 03:52 PM Re: CAREs ACT = PayCheck Protection Program MollyM
JennKK2 Offline
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so basically we are still following our bank's CIP / CDD procedures; and that if we had not obtained a BOC previously, for whatever reason, this would be a good time to do so. If we did have a BOC on file, no "re-verification" like a signature, would be necessary, - but based on bank's risk-based approach.

i'll just keep doing what we have been, sending out reminders to those to be aware of the CDD requirement.

am i capturing this correctly
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