April 2020 Foodman website and JD Supra

On April 13, 2020, FinCEN, as the administrator of the BSA, re-published FAQs on how borrowers and lenders may rely on the guidance provided for the SBA’s interpretation of the CARES Act and of the PPP (Paycheck Protection Program) Interim Final Rule (“PPP Interim Final Rule”).  FinCEN stated that the U.S. government will not challenge lender PPP actions that conform to this guidance, and to the PPP Interim Final Rule and any subsequent rulemaking in effect at the time.

Here are the highlights of FinCEN’s clarification:

If the PPP loan is being made to an existing customer and the necessary information was previously verified, the lender does not need to re-verify the information. If federally insured depository institutions and federally insured credit unions eligible to participate in the PPP program have not yet collected beneficial ownership information on existing customers, such institutions do not need to collect and verify beneficial ownership information for those customers applying for new PPP loans, unless otherwise indicated by the lender’s risk-based approach to BSA compliance.

For lenders with existing customers

With respect to collecting beneficial ownership information for owners holding a 20% or greater ownership interest, if the PPP loan is being made to an existing customer and the lender previously verified the necessary information, the lender does not need to re-verify the information.

If federally insured depository institutions and federally insured credit unions eligible to participate in the PPP program have not yet collected such beneficial ownership information on existing customers, such institutions do not need to collect and verify beneficial ownership information for those customers applying for new PPP loans, unless otherwise indicated by the lender’s risk-based approach to BSA compliance.

For lenders with new customers

The lender’s collection of the following information from all-natural persons with a 20% or greater ownership stake in the applicant business will be deemed to satisfy applicable BSA requirements and FinCEN regulations governing the collection of beneficial ownership information:

  • Owner name
  • Title
  • Ownership percentage
  • TIN
  • Address
  • Date of birth

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.

  • FinCEN directs questions about requirements related to beneficial ownership to the statutes and regulations of the CDD final rule.
  • 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.

Potential Applicants of the PPP ought to consult their Tax Specialist

Borrowers under the PPP must make “good faith” certifications.  Knowingly making a false statement to get a loan under the PPP is punishable by law.