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#2234728 - 04/13/20 10:31 PM Feedback on latest FinCEN PPP Updates
Justin Case Offline
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I would love to hear others' interpretation of what in holy H3!! is going on in this FAQ (second part of #2 on FinCEN's version) dated 4/13/2020:

"For lenders with new customers: For new customers, the lender’s collection of the following information from all natural persons with a 20% or greater ownership stake in the applicant business will be deemed to satisfy applicable BSA requirements and FinCEN regulations governing the collection of beneficial ownership information: owner name, title, ownership %, TIN, address, and date of birth. If any ownership interest of 20% or greater in the applicant business belongs to a business or other legal entity, lenders will need to collect appropriate beneficial ownership information for that entity. If you have questions about requirements related to beneficial ownership, go to https://www.fincen.gov/resources/statutes-and-regulations/cdd-final-rule. Decisions regarding further verification of beneficial ownership information collected from new customers should be made pursuant to the lender’s risk-based approach to BSA compliance."

Here is my interpretation: For new customers, we can use the information collected on the PPP application (if the application asks for all of the information - name, title, ownership %, TIN, address, and DOB) and not require the separate Beneficial Ownership form as described in the CDD Final Rule nor do we have to verify the identity of the individuals. BUT, and this is where I get thrown off the rails, IF the applicant entity is owned 20% or more by another entity, we then have to get the Beneficial Ownership form completed, NOT for the applicant entity but for the entity(s) who own the applicant entity?

Am I understanding correctly? If so, it's like they've rewritten the CDD Rule mid-stream and it's nothing like what is already in place. I really hope that I'm way off base.
Last edited by Justin Case; 04/13/20 10:41 PM.
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#2234745 - 04/14/20 01:52 PM Re: Feedback on latest FinCEN PPP Updates Justin Case
Justin Case Offline
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After reading further, I do believe that my initial take is wrong. I think what they're saying is that, because the PPP application doesn't specify that the owners listed have to be natural persons, if an entity is listed as owner then further drilling down would be necessary to get to a natural person in the ownership chain at which point it would have to be determined if that individual had an indirect ownership share of 25% or greater of the PPP applicant. So in those cases, the standard Certification of Beneficial Ownership form would be needed.

But I'm still not 100% certain though. cry
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#2234751 - 04/14/20 03:02 PM Re: Feedback on latest FinCEN PPP Updates Justin Case
rlcarey Offline
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That sounds correct based on:

If any ownership interest of 20% or greater in the applicant business belongs to a business or other legal entity, lenders will need to collect appropriate beneficial ownership information for that entity.
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#2234753 - 04/14/20 03:28 PM Re: Feedback on latest FinCEN PPP Updates Justin Case
John Burnett Offline
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Also interesting --

The SBA (perhaps with suggestions from Treasury) came up with its own interpretation of FinCEN's CDD rules to make it easier to get the PPP money out the door.

FinCEN then repeats SBA FAQs 18 and 25 as its own FAQs 1 and 2, and prefaces the FAQs in its document with "As the administrator of the BSA, the Financial Crimes Enforcement Network (FinCEN) is re-publishing those FAQs in this document. FinCEN will update this document with any additional BSA-related FAQs involving the PPP."

That statement to me says FinCEN is (perhaps reluctantly and perhaps prodded by Secretary Mnuchin) agreeing to SBA's relaxation of the EO requirements for the PPP loans, but reasserting its role as the rule-maker going forward.
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#2234755 - 04/14/20 03:38 PM Re: Feedback on latest FinCEN PPP Updates Justin Case
Sheldon Hendrix Offline
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Seems like FinCEN is begrudgingly conforming its guidance with that of its parent agency.

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#2234757 - 04/14/20 03:45 PM Re: Feedback on latest FinCEN PPP Updates Justin Case
John Burnett Offline
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It can be a PLUS when agencies agree on a rule. I was surprised, though, that the SBA's interpretation differed from FinCEN's rule, and wasn't surprised to see FinCEN effectively say it would accept the SBA interpretation but "we're making it OUR interpretation, and quit messing around in our bailiwick."
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#2234763 - 04/14/20 04:11 PM Re: Feedback on latest FinCEN PPP Updates Justin Case
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#2234772 - 04/14/20 05:15 PM Re: Feedback on latest FinCEN PPP Updates Justin Case
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Originally Posted by Justin Case
... if an entity is listed as owner then further drilling down would be necessary to get to a natural person in the ownership chain at which point it would have to be determined if that individual had an indirect ownership share of 25% or greater of the PPP applicant. So in those cases, the standard Certification of Beneficial Ownership form would be needed.

But I'm still not 100% certain though. cry


Agreed. FinCEN/SBA seem to be saying, if the PPP Borrower Application Form lists a legal entity as a 20%+ owner, then standard "BSA UBO" procedures apply.

What I find confusing and have a pending question out to FinCEN for is whether or not they're suggesting that the drill-down needs to be documented. I'm guessing no because it conflicts with the spirit of the CDD rule, but the PPP guidance relative to BSA is poorly worded.
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#2234776 - 04/14/20 05:50 PM Re: Feedback on latest FinCEN PPP Updates Pat Patriot Act
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What if the depository institution's standard policy requires collection of beneficial ownership information >= 25% and the PPP application for an existing client ends up pulling in an equity owner with an ownership interest in the range of 20-24%? Why on earth would they not remain consistent with the 25% threshold?

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#2234780 - 04/14/20 06:45 PM Re: Feedback on latest FinCEN PPP Updates Justin Case
Justin Case Offline
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Here's another question. What about the date of birth? The FAQ specifically mentions that the date of birth is required. However, the SBA PPP Application does not have a field to enter the DOB of Beneficial Owners. Thoughts on that?
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#2234820 - 04/15/20 04:46 AM Re: Feedback on latest FinCEN PPP Updates Justin Case
Kaos Offline
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What about the Control, who doesn't have an ownership interest, and certifies the information?

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#2234826 - 04/15/20 01:37 PM Re: Feedback on latest FinCEN PPP Updates Justin Case
John Burnett Offline
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The problem is that these FAQs were authored by the SBA, not FinCEN. FinCEN only issued its FAQ to [reluctantly, IMHO] bless the SBA's interpretation, and reassert FinCEN's control over the issue going forward, in effect directing the SBA to stay away from the FinCEN requirement from now on.
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#2235312 - 04/21/20 03:07 PM Re: Feedback on latest FinCEN PPP Updates Justin Case
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So is anyone collecting the control beneficial owner for these?

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#2236166 - 05/05/20 02:04 PM Re: Feedback on latest FinCEN PPP Updates terpsfan
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From FinCEN PPP FAQ:

As stated in the FAQs issued by the SBA, borrowers and lenders may rely on the guidance provided in this document as SBA’s interpretation of the CARES Act and of the PPP Interim Final Rule (“PPP Interim Final Rule”) (link). The U.S. government will not challenge lender PPP actions that conform to this guidance, and to the PPP Interim Final Rule and any subsequent rulemaking in effect at the time.
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