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Paycheck Protection Program Frequently Asked Questions (FAQs), As of April 13, 2020 (FinCEN)

Summary

This FinCEN document, Paycheck Protection Program Frequently Asked Questions as of April 13, 2020, re-publishes FAQs that the SBA, in consultation with Treasury, issued on how lenders can meet Bank Secrecy Act requirements when making PPP loans. It states that borrowers and lenders may rely on it as SBA's interpretation of the CARES Act and the PPP Interim Final Rule, and that the U.S. government will not challenge lender PPP actions that conform to the guidance. The first question asks whether PPP loans to existing customers count as new accounts for the customer due diligence rule, and the answer is that if the necessary information was previously verified, the lender does not need to re-verify it. A later question addresses whether collecting information on owners of 20% or more satisfies the Bank Secrecy Act's 25% beneficial ownership threshold.

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                                Paycheck Protection Program
                             Frequently Asked Questions (FAQs)

                                          As of April 13, 2020
The Small Business Administration (SBA), in consultation with the U.S. Department
of the Treasury, has been issuing FAQs1 regarding implementation of the Paycheck
Protection Program (PPP), established by section 1102 of the Coronavirus Aid, Relief,
and Economic Security Act (CARES Act or the Act). Specifically, some of those FAQs
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 re-publishing those FAQs in this
document. FinCEN will update this document 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 provided in this document as SBA’s interpretation of the CARES Act and of the
PPP Interim Final Rule (“PPP Interim Final Rule”) (link). 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.2

1. Question: Are PPP loans for existing customers considered new accounts for
   FinCEN Rule CDD purposes? Are lenders required to collect, certify, or verify
   beneficial ownership information in accordance with the rule requirements for
   existing customers?

     Answer: If the PPP loan is being made to an existing customer and the necessary
     information was previously verified, you do not need to re-verify the information.

     Furthermore, 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




1.   See https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses.

2.   This document does not carry the force and effect of law independent of the statute and regulations on
     which it is based.

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                               Financial Crimes Enforcement Network
                                 Paycheck Protection Program FAQs



     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.3 [April 6, 2020]

2. Question: Does the information lenders are required to collect from PPP applicants
    regarding every owner who has a 20% or greater ownership stake in the applicant
    business (i.e., owner name, title, ownership %, TIN, and address) satisfy a lender’s
    obligation to collect beneficial ownership information (which has a 25% ownership
    threshold) under the Bank Secrecy Act?

     Answer: 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.
     Furthermore, 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
     Bank Secrecy Act (BSA) compliance.

     For lenders with new customers: For 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 %, 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. If you have questions about requirements related to beneficial ownership,
     go to https://www.fincen.gov/resources/statutes-and-regulations/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.4 [April 13, 2020]




3.   This FAQ is the same as FAQ 18 of the SBA FAQs
     (https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses).

4.   This FAQ is the same as FAQ 25 of the SBA FAQs
     (https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses).

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