OCC Bulletin 2020-34| April 7, 2020
Bank Secrecy Act/Anti-Money Laundering: OCC Supports FinCEN’s Regulatory Relief and Risk-Based Approach for Financial Institution Compliance in Response to COVID-19
Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties
The Office of the Comptroller of the Currency (OCC) recognizes the recent disruptions and significant challenges faced by banks1 as a result of the coronavirus disease (also known as COVID-19). In light of these developments, on April 3, 2020, the Financial Crimes Enforcement Network (FinCEN) issued an updated COVID-19 notice (FinCEN BSA Notice)2 that recognizes the effect these circumstances may have on the ability of financial institutions to meet certain Bank Secrecy Act (BSA) obligations, including the timing requirements for certain BSA report filings. The FinCEN BSA Notice provides for certain regulatory relief under the risk-based approach to BSA compliance, including exempting from beneficial ownership requirements new loans extended to existing customers under the Coronavirus Aid, Relief, and Economic Security (CARES) Act Paycheck Protection Program.3 The OCC supports this approach and encourages all banks to follow a risk-based approach to managing their BSA compliance programs. When evaluating a bank’s BSA compliance program, the OCC will consider the actions taken by banks to protect and assist employees, customers, and others in response to the COVID-19 pandemic, including any reasonable delays in BSA report filings, beneficial ownership verification or re-verification requirements, and other risk management processes. Banks are encouraged to contact their examiners if they anticipate delays.
Note for Community Banks
The information in this bulletin applies to community banks.
The OCC is committed to promoting the successful implementation of the CARES Act, the expeditious disbursal of CARES Act funds, and the safety and security of banks and the financial system during this difficult period. The OCC encourages banks to continue to employ a risk-based approach to BSA compliance as they address the COVID-19 crisis, and supports the flexibilities announced in FinCEN’s March 16, 2020, COVID-19 notice (FinCEN COVID-19 Notice).4
The FinCEN BSA Notice recognizes generally that in applying a risk-based approach during the current crisis, financial institutions may face difficulties in meeting certain BSA obligations, including the regulatory timing requirements for certain BSA report filings, and that there may be some reasonable delays in compliance. The OCC joins FinCEN in encouraging financial institutions to consider, evaluate, and, where appropriate, responsibly implement innovative approaches to meet their BSA reporting requirements and other compliance obligations.5 The OCC also recognizes that meeting certain regulatory timing requirements for BSA filings and bank-imposed timing requirements for other BSA risk management processes may be challenging during the COVID-19 pandemic, and that there may be reasonable delays in compliance as a result of resource constraints, limited customer access, or changing priorities caused by an evolving risk profile.
The FinCEN BSA Notice reminds financial institutions of FinCEN’s September 7, 2018, ruling (September 2018 ruling) granting exceptive relief to covered financial institutions from the requirements to identify and verify the identity of beneficial owner(s) when a legal entity customer opens a new account as a result of (i) a rollover of a certificate of deposit, or (ii) the renewal, modification, or extension of certain lines of credit or loans, among other scenarios.6 The FinCEN BSA Notice recognizes that there may be reasonable delays in beneficial ownership compliance for non-Payroll Protection Program and other loans and certain transactions that may fall outside the scope of the September 2018 ruling. The OCC recognizes that reasonable delays in compliance with beneficial ownership requirements under these circumstances would be an appropriate risk-based approach during the COVID-19 pandemic.
The FinCEN BSA Notice also suspends implementation until further notice of the February 6, 2020, ruling on Currency Transaction Report (CTR) filing obligations when reporting transactions involving sole proprietorships and entities operating under a “doing business as” (DBA) name.7 The OCC will not criticize in reviews of BSA compliance financial institutions that continue to report transactions involving sole proprietorships and DBAs under prior practice simply for not yet having implemented the updated practice in accordance with the now-suspended ruling.
In addition, the FinCEN BSA Notice announces the creation of a COVID-19-specific contact mechanism, via a specific drop-down category, for financial institutions to communicate to FinCEN COVID-19-related concerns while adhering to their BSA obligations. Banks that wish to communicate such COVID-19-related concerns to FinCEN must go to www.FinCEN.gov, click on “Need Assistance,” and select “COVID19” in the subject drop-down list. Such COVID-19-related communications are strongly encouraged but not required. Banks are also encouraged to keep FinCEN and the OCC informed as their circumstances change.
Compliance with the BSA remains crucial to protecting national security by combating money laundering and related crimes, including terrorism and its financing, during national emergencies such as the COVID-19 pandemic. The FinCEN COVID-19 Notice identified emerging trends of impostor scams, investment scams, product scams, and insider trading and asked financial institutions to remain alert for malicious or fraudulent schemes, such as those that occur in the wake of natural disasters.8 In addition, fraudulent or criminal elements may attempt to infiltrate lending and other programs being implemented under the CARES Act, creating further challenges for financial institutions. The OCC encourages financial institutions to follow a risk-based approach in addressing these issues and challenges, while continuing to meet BSA obligations.
Consistent with long-standing practices, the OCC will consider the unusual circumstances faced during the COVID-19 crisis when reviewing BSA compliance programs and determining any supervisory response. As needed, the OCC will work with affected banks to reduce burden when scheduling examinations or inspections, including making greater use of off-site reviews, consistent with applicable legal and regulatory requirements. The OCC also will work with banks that may experience problems fulfilling their reporting responsibilities and will take into account each bank’s particular circumstances. The OCC encourages banks to contact their examiners regarding any BSA compliance concerns.
Please contact Tami Newett, BSA/AML Policy Specialist, Bank Supervision Policy at (202) 649-5470.
Grovetta N. Gardineer
Senior Deputy Comptroller for Bank Supervision Policy
- FinCEN Notice, April 3, 2020: The Financial Crimes Enforcement Network Provides Further Information to Financial Institutions in Response to the Coronavirus Disease 2019 (COVID-19) Pandemic
4 Refer to "The Financial Crimes Enforcement Network (FinCEN) Encourages Financial Institutions to Communicate Concerns Related to the Coronavirus Disease 2019 (COVID-19) and to Remain Alert to Related Illicit Financial Activity," (March 16, 2020).
5 Refer to OCC Bulletin 2018-44, “Joint Statement on Innovative Efforts to Combat Money Laundering and Terrorist Financing,” conveying the joint statement issued by the federal financial regulators and FinCEN.
6 Refer to FinCEN Ruling FIN-2018-R004.
7 Refer to FinCEN Ruling FIN-2020-R001.
8 Refer to FinCEN Advisory FIN-2017-A007.This advisory provides descriptions of other relevant typologies, such as benefits fraud, charities fraud, and cyber-related fraud.