Skip to main content

FinCEN Addresses the CARES Act, Suspends Implementation of CTR Filing Changes, and Offers COVID-19 Online Contact Mechanism

On April 3, 2020, FinCEN issued its second notice related to the COVID-19 pandemic (Notice).[1]  FinCEN recognizes that financial institutions face challenges related to the COVID-19 pandemic and seeks to provide additional information to assist financial institutions in complying with their Bank Secrecy Act (BSA) obligations during the pandemic.  The Notice stresses that compliance with the BSA remains crucial to protecting the national security by combating money laundering and related crimes, including terrorism.  FinCEN expects financial institutions to continue following a risk-based approach and diligently adhere to their BSA obligations. 

Beneficial Ownership Information Collection Requirements for Existing Customers

The Notice addresses the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and FinCEN’s commitment to the success of the CARES Act, including the need to facilitate expeditious disbursal of CARES Act funds. 

The Paycheck Protection Program (PPP) of the CARES Act consists of $349 billion in government-backed loans to help companies maintain their payrolls through June 2020.[2]  Regarding PPP loans and BSA requirements for verification of beneficial ownership, the Notice provides that 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 its September 7, 2018, administrative ruling, which excuses financial institutions from the requirement to identify and verify the identity of the beneficial owner(s) when a legal entity customer renews, modifies, or extends existing loans and commercial lines of credit or credit card accounts that do not require new underwriting and approval. FinCEN stated that “[t]o 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 promises to issue further information, as appropriate, as the CARES Act is implemented and questions arise.

BSA Reporting Obligations and Updates to Currency Transaction Report Filing Obligations

Recognizing that certain regulatory timing requirements with regard to BSA filings may be challenging during the COVID-19 pandemic, FinCEN suspended implementation of a February 6, 2020 ruling, which was set to become effective on April 6, 2020, on certain currency transaction report (CTR) filing obligations when reporting transactions involving sole proprietorships and entities operating under a “doing business as” (DBA) name (2020 Ruling) until further notice.  The February ruling clarified CTR filing obligations using FinCEN Form 112 and gave specific instructions for completion of Part I of the form when reporting transactions involving sole proprietorships and legal entities operating under a “doing business as” name (DBA), including listing the appropriate name and headquarters information in various fields.  At the time of its issuance, FinCEN stated that the ruling was done in an effort to both enhance regulatory efficiency and provide complete and accurate CTR data to law enforcement.  Until such further notice, financial institutions should continue to report transactions involving sole proprietorships and DBAs under prior practice.

Further, FinCEN generally recognized that certain regulatory timing requirements with regard to BSA filings may be challenging during the COVID-19 pandemic and that there may be some reasonable delays in compliance.

New FinCEN COVID-19 Online Contact Mechanism

The Notice also highlights FinCEN’s creation of a COVID-19-specific online contact mechanism, via a specific drop-down category, for financial institutions to communicate to FinCEN COVID-19-related concerns “while adhering to their BSA obligations.”  Financial institutions that want to communicate such COVID-19-related concerns to FinCEN must go to www.FinCEN.gov, click on “Need Assistance,” and select “COVID19” in the subject drop-down list. 

 

[2]            See CARES Act, § 1102, H.R. 748 – 13.

Subscribe To Viewpoints

Authors

Therese M. Doherty

Member / Co-Chair, Financial Services Practice

Therese M. Doherty is a Mintz litigator who develops creative strategies to drive successful outcomes for clients. The Legal 500 United States consistently ranks her as one of the nation's top securities lawyers. Therese has a national reputation for defending clients in government investigations.

LisaMarie Collins

Of Counsel

LisaMarie Collins resolves complex legal matters for Mintz clients in the financial industry, handling issues concerning derivatives, commodity futures, civil securities litigation, and general commercial litigation. She also represents clients in class actions, arbitrations, and regulatory investigations.