By Al Barbarino

Law360 (April 6, 2020, 10:36 PM EDT) -- The Financial Crimes Enforcement Network has issued updated guidance providing relief from certain disclosures and requirements to assist with Bank Secrecy Act compliance concerns amid the COVID-19 pandemic.

FinCEN reminded financial firms of their obligations in a statement Friday but granted leniency on two key requirements related to currency transaction reports and the CARES Act. It also announced the launch of a new website feature to help track ongoing concerns regarding BSA compliance.

"FinCEN expects financial institutions to continue following a risk-based approach, and to diligently adhere to their BSA obligations," the agency said. It also acknowledged that COVID-19 has "created challenges in meeting certain BSA obligations, including the timing requirements for certain BSA report filings."

As part of the new guidance, FinCEN suspended the implementation of a Feb. 6 ruling regarding so-called currency transaction reports, temporarily lifting the requirement that an individual report their given name in transactions involving sole proprietorships or businesses conducted under a different name. CTRs require that firms report one or more transactions exceeding $10,000 on any given day.

"FinCEN will issue further information on these types of CTR filings at an appropriate time with reasonable implementation periods," the agency said, noting that firms that already made the necessary compliance changes may continue reporting in line with the suspended ruling.

The second update concerns the recently passed $2 trillion Coronavirus Aid, Relief and Economic Security Act, under which the Paycheck Protection Program will grant up to $349 billion to small businesses and the self-employed for job retention purposes and other expenses.

FinCEN said that for loans issued under the PPP, eligible federally insured depository institutions and credit unions will not need to reverify existing customers per BSA requirements. The agency also noted that, for non-PPP loans, a Sept. 7, 2018, ruling offers relief from the Beneficial Ownership Rule to renewal, modification, restructuring or extensions for existing legal entity customers.

While many are applauding the ongoing stream of regulatory relief agencies are issuing amid the ongoing pandemic, critics in some cases have argued they don't go far enough.

Based on the latest FinCEN guidance, financial institutions will be hesitant to provide PPP loans to small businesses if they don't have an existing relationship with them, Cadwalader Wickersham & Taft LLP partner Joseph Moreno said in a commentary posted to his firm's website.

The June 30 application deadline for the PPP may not be realistic for prospective lenders, he added. It will be difficult to establish BSA compliance and anti-money laundering programs, which could require customer identification programs, various data collection from legal entity customers, and filing suspicious activity reports with FinCEN, within that time frame, Moreno said.

"Conducting proper risk-based AML/BSA due diligence takes time even under noncrisis circumstances, and FinCEN is signaling that financial institutions remain fully responsible for their obligations despite the COVID-19 pandemic," he wrote. "[The] limited relief to would-be PPP lenders will do little to assuage their legitimate concerns."

The new FinCEN website feature allows financial institutions to communicate concerns related to COVID-19 and BSA obligations and delays. The agency noted that the volume of communications could lead it to provide automated receipt confirmations.

FinCEN did not immediately respond to requests for comment.

--Editing by Breda Lund.

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