On September 14, 2020,  the Financial Crimes Enforcement network (FinCEN) closed the regulatory gap and issued a final rule which removed the anti-money laundering (AML) program exemption for financial institutions that lack a Federal functional regulator, including, but not limited to, private banks, non-federally insured credit unions, and certain trust companies. These institutions will now have to comply with additional regulatory obligations provided by the USA PATRIOT Act previously reserved only for banks with a Federal functional regulator.

These now covered institutions without a Federal functional regulator were already required to comply with certain BSA obligations, such as filing suspicious activity reports (SARs) and currency transaction reports (CTRs). Now, based on this final rule, these institutions must expand their existing policies and procedures. Specifically, these newly covered financial institutions must:

  • establish and implement AML controls;
  • comply with Customer Identification Program (CIP) requirements; and
  • comply with beneficial ownership information requirements.

Private banks, non-federally insured credit unions, and certain trust companies have six months, until March 15, 2021, to comply with the reported anti-money laundering, customer identification, and beneficial ownership program requirements.