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BSA/AML Hot Topics: FinCEN issues new notice in response to COVID-19

By Naomi Glass, AVP, BSA/AML Compliance Officer

Corporate One's BSA/AML webinar series

Now it’s easier than ever for all levels of BSA professionals to remain compliant. Both webinars will be presented by Mark W. Dever, CAMS, AAP, and vice president at ProBank Austin.

BSA Essentials
May 7, 1:00 – 4:00 p.m.

Now streamlined into a one-day, three-hour training, our traditional, annual compliance will discuss all the essentials, such as:

  • Member Due Diligence
  • Suspicious Activity Reporting
  • Currency Transaction Reporting

BSA Latest Information, Regulatory Update and Examiner Focus
October 27, 2:00 – 3:00 p.m.

Geared toward the more seasoned BSA/AML professional, we’ll get you up to speed on the most current industry news and information in just one hour. Topics will include:

  • Member Due Diligence
  • Audit Completion Survival Tips
  • High-Risk Members

Throughout the COVID-19 pandemic, guidance from regulatory authorities has been crucial in trying to manage the impact of the deadly virus on both public health and the economy. The Financial Crimes Enforcement Network (FinCEN), which is responsible for oversight of the Bank Secrecy Act (BSA), has released several recent notices to financial institutions to assist them in navigating this constantly changing regulatory landscape while they continue to meet their BSA compliance obligations.

As a refresher, my article in March focused on FinCEN’s release of a notice on March 16 that provided guidance to financial institutions in response to the COVID-19 pandemic. This notice requested that if financial institutions are affected by the outbreak and have concerns that they might not be able to file required BSA reports on time, they should notify FinCEN and their functional regulator as soon as possible. The notice also warned financial institutions to be cognizant of malicious or fraudulent transactions similar to those that occur in the wake of a natural disaster. FinCEN indicated that fraudsters are already using the pandemic to their advantage by engaging in illicit activity such as imposter scams, investment scams, product scams, and insider trading.

On April 3, FinCEN issued a second notice that provided the following additional guidance to financial institutions regarding BSA compliance during the pandemic:

New FinCEN COVID-19 Online Contact Mechanism

FinCEN created a new mechanism for financial institutions to be able to get in contact with the agency for pandemic-related issues. The initial guidance from March simply provided a phone number and email address for financial institutions to use to reach FinCEN’s Regulatory Support Section. Now, financial institutions have the added, more efficient option of contacting FinCEN via a form on its website. Specifically, financial institutions that wish to communicate COVID-19-related concerns to FinCEN can visit, click on “Need Assistance,” and select “COVID19” in the subject drop-down list.

Beneficial Ownership Requirements: Paycheck Protection Program (PPP)

Congress’ passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act resulted in the establishment of the PPP, a federal loan program that provides forgivable loans to qualifying small businesses that continue to pay their employees during this financial crisis. FinCEN’s notice indicated that eligible, federally insured credit unions and depository institutions that provide PPP loans to existing members/customers do not need to re-verify the identities of the business’ beneficial owners under applicable BSA requirements unless otherwise indicated by the institution’s risk-based approach to BSA compliance. (Note: As of April 13, FinCEN released an FAQ that more specifically addresses questions related to beneficial ownership requirements and PPP lending.)

Pause on Updated Currency Transaction Report (CTR) Filing Obligations

FinCEN has temporarily suspended the implementation of a February 6, 2020, administrative ruling (FIN-2020-R001), which clarifies how CTRs should be filled out by financial institutions on cash transactions involving sole proprietorships and business entities that go by a “doing business as” name. FinCEN’s notice stated that financial institutions already filing CTRs using the new method should not revert back to prior practice. FinCEN further advised it would notify financial institutions when the implementation of the rule is to be resumed.

In conclusion, although regulatory expectations related to BSA compliance are rapidly changing as a result of COVID-19, FinCEN is continuing to support financial institutions for the duration of the outbreak and recognizes that there may be some reasonable delays in compliance because of the pandemic. FinCEN indicated that it would issue additional new information to financial institutions as appropriate. Stay tuned.