On February 13, FinCEN issued an order granting “exceptive relief” to covered financial institutions from the requirement under the 2016 CDD rule to identify and verify the beneficial owners of a legal entity customer at each new account opening. The order limited this obligation to three circumstances: (i) when a legal entity customer first opens an account; (ii) when facts arise that reasonably call into question the reliability of previously obtained ownership information; and (iii) as otherwise dictated by the financial institution’s risk-based procedures for ongoing customer due diligence. FinCEN described the action as part of Treasury’s effort to modernize the BSA/AML framework while maintaining safeguards against illicit finance, responding to industry concerns that duplicative verification requirements imposed unnecessary costs without adding meaningful risk management value.

The order stated that institutions must continue meeting all other BSA/AML obligations, including monitoring for suspicious transactions and updating customer information as needed. FinCEN stated that this measure aligns with its responsibilities under the Corporate Transparency Act to revise the 2016 CDD rule, and that it anticipates pursuing additional changes to the rule through the rulemaking process. The agency emphasized that institutions may choose to exceed the minimum requirements if consistent with their risk profiles, and that the relief is discretionary and subject to revocation.