U.S. Treasury extends ‘beneficial ownership’ rule exemption for rollovers and renewals

The U.S. Treasury Department’s anti-money laundering unit on Wednesday extended for another month temporary relief exempting certain rollover or renewal products and services from the bureau’s beneficial ownership rule.

The exemption had been slated to expire today. Treasury’s Financial Crimes Enforcement Network (FinCEN) extended the relief through September 8 to “further consider the issue,” a written statement issued on Wednesday says. The goal of the beneficial ownership rule is to help lift the corporate veil that allows criminals to hide their ownership and control of accounts and assets.

One of the banking industry’s greatest concerns with the rule, which came into force in May, relates to rollovers of certificates of deposit and renewals of lines of credit. The outstanding question is whether such rollovers and renewals should constitute new accounts and thereby trigger a requirement to collect beneficial ownership information.

This compliance conundrum emerged in April when Question 12 of a FinCEN beneficial ownership rule FAQ suggested that rollovers of certificates of deposit and renewals of lines of credit did constitute new client-customer relationships and triggered the beneficial ownership collection requirement.

Although the FAQ said banks would be permitted to ask customers who have provided ownership information to certify that they will notify the bank of any changes in relation to rollovers and renewals, it also suggested that customers who had never provided the information would be required to do so.

Bankers expressed serious concerns about the compliance burden this would create given the large volume of such rollovers and renewals and FinCEN responded with temporary relief. It appears Treasury requires at least another month to weigh the issue. Two senior compliance officers at large U.S. banks on Wednesday told Regulatory Intelligence the industry remains hopeful that FinCEN will opt to make the current exemption permanent.

(By Brett Wolf, Regulatory Intelligence, St. Louis) Produced by Thomson Reuters Accelus Regulatory Intelligence 13-Aug-2018

Published 09-Aug-2018 by Brett Wolf, Regulatory Intelligence

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