FinCEN recently updated its Frequently Asked Questions regarding the implementation of the Paycheck Protection Program (PPP), established by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act or the Act). The Small Business Administration (SBA) has issued FAQs regarding implementation of the PPP, some of which involve explaining the requirements under the Bank Secrecy Act (BSA), and how lenders can meet those requirements when issuing a PPP loan.
As the administrator of the BSA, the Financial Crimes Enforcement Network (FinCEN) is republishing those FAQs. FinCEN will update the publication with any additional BSA-related FAQs involving the PPP. As stated in the FAQs issued by the SBA, borrowers and lenders may rely on the guidance as SBA’s interpretation of the CARES Act and of the PPP rules. The U.S. government will not challenge lender PPP actions that conform to this guidance, and to the PPP rules and any subsequent rule-making in effect at the time.
The FAQs provide for the following.
Existing Customers and Whether They are “New Accounts” for CDD Purposes
If a PPP loan is being made to an existing customer and the necessary information was previously verified, you do not need to reverify the information. Also, if an institution has 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.
Beneficial Ownership Informa- tion for Owners Holding a 20% or Greater Ownership Interest
• For lenders with existing customers: 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 reverify the information. Like above, if an institution has 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: If the lender collects the following information from all natural persons with a 20% or greater ownership stake in the applicant business, it will be deemed to satisfy applicable BSA requirements and FinCEN regulations governing the collection of beneficial ownership information (owner name, title, ownership %, TIN, address, and 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.
Second Draw PPP Loans
The above FAQs apply to Second Draw PPP loans. Also, the lender can rely on the information obtained from a borrower in connection with a First Draw PPP Loan for a Second Draw PPP Loan, if the borrower is an existing customer.
FinCEN’s FAQs currently may be found at: https://www.fincen. gov/sites/default/files/2021-02/ Paycheck_Protection_pro- gram_%20FAQs_Jan2021.pdf. The SBA’s PPP FAQs currently may be found at: https:// www.sba.gov/sites/default/ files/2021-03/PPPFAQs%20 3.2.21-508.pdf.
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