Compliance Journal February 2026
Special Focus FinCEN Issues Order Granting Relief to Banks From Certain CDD Requirements In an order dated February 13, 2026, the Financial Crimes Enforcement Network (FinCEN) granted exemptive relief to banks from the requirement to identify and verify beneficial owners of legal entity customers at each account opening. 2016 Customer Due Diligence Rule FinCEN issued its customer due diligence rule in 2016 requiring covered financial institutions (banks) to identify the beneficial owner(s) of each legal entity customer by obtaining from each such customer specified information about its beneficial owner(s), either via a certification form, or by some other means, provided the individual performing the information certifies the information is accurate. Identification need occur “at the time a new account is opened.” FinCEN’s regulations define the phrase “new account” to mean “each account opened at a covered financial institution by a legal entity customer on or after the applicability date.” In addition to requiring identification of beneficial owner(s) of legal entity customers, the 2016 rule further required banks to verify the identity of each beneficial owner identified to the bank, according to risk-based procedures to the extent reasonable and practicable within a reasonable time after an account is opened. Under the 2016 rule, banks are required to identify and verify a legal entity customer’s beneficial owners(s) each time that customer opens an account with the bank, regardless of how little time passes between account openings or whether the bank has knowledge of facts that would reasonably call into question the reliability of beneficial ownership information last obtained about the customer. Exemptive Relief FinCEN has granted exemptive relief to banks from the requirements to identify and verify the identities of beneficial owner(s) of legal entity customers at each new account opening. A bank may instead limit its identification and verification of the identities of beneficial owner(s) to the following scenarios: 1. When a legal entity customer first opens an account with the bank; 2. Any time thereafter when the bank has knowledge of facts that would reasonably call into question the reliability of beneficial ownership information previously obtained about the legal entity customer; and 3. As needed, based on the bank’s risk-based procedures for conducting ongoing customer due diligence. When the bank determines, based on its risk-based procedures for conducting ongoing customer due diligence, that it needs to identify and verify the identity of the beneficial owner(s) of a legal entity customer, the bank may rely on beneficial ownership information previously obtained provided the customer certifies or confirms (verbally or in writing) that such information is up-to-date and accurate. The bank must maintain a record of such certification or confirmation, including for both verbal and written confirmations by the customer. If a customer is unable to certify or confirm that previously obtained beneficial ownership information is up-to-date and accurate, or if the bank has knowledge of facts that would reasonably call into question the reliability of beneficial ownership information previously obtained about the legal entity customer, the bank must identify and verify the identities of the beneficial owner(s) of the legal entity customer in accordance with the customer due diligence rule, 31 C.F.R. § 1010.230.