John Zasada, Compliance Consulting Director, Financial Institutions Group

On April 13, 2020, the Financial Crimes Enforcement Network (FinCEN) issued two Frequently Asked Questions (FAQs) addressing the Paycheck Protection Program (PPP) and the Bank Secrecy Act (BSA). Previously, the Small Business Administration issued FAQs explaining how lenders issuing PPP loans can meet BSA requirements. Since it is the administrator of the BSA, FinCEN is republishing those FAQs.

The first FAQ addresses whether PPP loans for existing customers is considered a new account for customer due diligence purposes. FinCEN answers that if a PPP loan is made to an existing customer and the required information was previously verified, then reverification is not necessary. Furthermore, unless otherwise required by a lender’s BSA program, if a lender has not previously collected beneficial ownership information on existing customers, the lender does not need to collect this information for existing customers applying for PPP loans.

The second FAQ addresses whether the information lenders are required to collect from PPP applicants regarding every owner who has a 20% or greater ownership stake in the applicant business satisfies a lender’s obligation to collect beneficial ownership information under the BSA. FinCEN states lenders with existing customers do not need to collect and verify beneficial ownership information unless otherwise required by a lender’s BSA program. For lenders with new customers, the lender’s collection of certain information (owner name, title, ownership %, TIN, address and date of birth) from all-natural persons with a 20% or greater ownership stake in the applicant business will be deemed to satisfy applicable the BSA. 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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