Bank Regulators Provide Targeted BSA Reporting Relief and Update Guidance Amid COVID-19 Pandemic
Recently, the Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency have provided targeted relief from certain Bank Secrecy Act reporting requirements and have updated guidance on complying with such requirements during the coronavirus (COVID-19) outbreak.
On April 3, FinCEN issued a statement ( FinCEN Statement) for immediate release that, in relevant part:
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Reminds financial institutions that BSA compliance is critical to national security and that FinCEN expects financial institutions to continue to take a risk-based approach to complying with the BSA and related requirements.
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Grants targeted relief to financial institutions participating in the Paycheck Protection Program (PPP) established under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), stating that a financial institution’s PPP loans to existing customers will not require re-verification under applicable BSA requirements, unless re-verification is otherwise required under the financial institution’s risk-based BSA compliance program.
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Recognizes that there may be “reasonable delays in compliance” due to the COVID-19 pandemic, including meeting certain regulatory timing requirements for BSA filings such as currency transaction reports (CTR).
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Suspends until further notice implementation of a February 2020 ruling (FIN-2020-R001), which would have been effective on April 6 and will, when effective, implement significant changes to CTR filing requirements for transactions involving sole proprietorships and entities operating under a “doing business as” or other assumed name.
Similarly, on April 7 the OCC issued OCC Bulletin 2020-34 which supports the approach to compliance with BSA requirements that are set forth in the FinCEN Statement, “supports the flexibilities” announced in the FinCEN Statement, and encourages all national banks to follow a risk-based approach to their BSA compliance programs. The OCC also confirmed that it will consider the actions taken by a national bank to protect and assist employees, customers and others in response to the COVID-19 pandemic when evaluating the bank’s BSA compliance program, including any reasonable delays in BSA report filings, beneficial ownership verification or re-verification, and other risk management processes.
The statement’s comments regarding the ability of financial institutions to rely on knowledge of existing customers could potentially be cited as a reason for giving preference and priority to PPP applications submitted by companies with existing relationships. Banks have received criticism in media for favoring existing customers based on the presumption that such favoritism was driven solely by the desire to cultivate better business relationships. The statement provides a practical reason for that practice.
Both FinCEN and the OCC have encouraged banks to contact FinCEN and their banking regulators if reasonable delays in compliance are anticipated.
The FinCEN Statement and OCC Bulletin are important guideposts for financial institutions navigating the current COVID-19 outbreak. We recommend that all banks carefully review both issuances and consider their impacts on business relationships and management, operational, and compliance decisions.