Financial Crimes Enforcement Network Republishes FAQs Relevant to Customer Due Diligence for Paycheck Protection Program Loans

The U.S. Small Business Administration, in consultation with the Department of the Treasury, has been issuing frequently asked questions (FAQs) for lenders making loans under the Paycheck Protection Program (PPP) established by the Coronavirus Aid, Relief and Economic Security Act.¹ On April 13, 2020, the Financial Crimes Enforcement Network (FinCEN), as administrator of the Bank Secrecy Act (BSA), republished two FAQs pertaining to customer due diligence requirements under the BSA and stated that it would update the publication with any additional BSA-related FAQs.²

The first FAQ addressed verification of customer identity in the context of existing customers. First, the FAQ stated that if a PPP loan is being made to an existing customer, and the covered financial institution lender (the Lender) has already verified a customer’s identity, the Lender does not need to reverify the identity for purposes of a PPP loan. This FAQ also stated that Lenders do not have to collect and verify beneficial ownership information for existing customers applying for a PPP loan unless otherwise indicated by the Lender’s BSA compliance program.

The second FAQ discussed the collection and verification of beneficial ownership information of legal entity customers in more detail. The first part of this FAQ follows from the beneficial ownership conclusion in the previous FAQ. In the case of a Lender making PPP loans to an existing customer, if a Lender already verified the identity of beneficial owners of an existing customer, the Lender does not need to do so again for a PPP loan. Also, if a Lender has not yet collected information on the beneficial owners of an existing customer, the Lender does not need to collect and verify the identity of beneficial owners for a PPP loan unless otherwise indicated by the Lender’s BSA compliance program.

This FAQ also addressed the case of beneficial ownership requirements for a Lender with a new customer. The FAQ does not provide relief with respect to the type of information to be collected. It is unclear whether it provides relief with respect to the requirement to submit the required information in a manner that is certified as to accuracy to the best of the submitter’s knowledge. The FAQ also does not expressly state that the collection of the beneficial ownership information for a new customer satisfies the requirement to verify the identity of beneficial owners of such new customer. Instead, it leaves additional verification measures up to the individual Lender in stating, “Decisions regarding further verification of beneficial ownership information collected from new customers should be made pursuant to the lender’s risk-based approach to BSA compliance.”