The US anti-money laundering (AML) agency, the Financial Crimes Enforcement Network (FinCEN), has issued guidance regarding AML compliance for financial institutions during the current COVID-19 pandemic. This guidance would be in addition to any issuances from their respective functional regulators, if any.
March 16 Guidance
On March 16, 2020, FinCEN issued guidance requesting that financial institutions contact the agency if they encounter delays in filing required reports under the federal AML law called the Bank Secrecy Act (BSA).
FinCEN also advised financial institutions with suspicious activity reporting responsibilities to be especially vigilant regarding possible COVID-19-related malicious or fraudulent transactions such as:
- Imposter Scams: impersonating government agencies or international organizations to solicit COVID-19- linked donations
- Investment Scams: promoters falsely urging investment in product or services of publicly traded companies that are developing cures for COVID-19
- Product Scams: companies selling or marketing unapproved or misbranded products falsely touting COVID-19 related health claims
- Insider Trading: there have been reports of suspected COVID-19 insider trading
FinCEN also referred financial institutions to its 2017 advisory on disaster-related fraud.
April 3 Guidance
On April 3, 2020, FinCEN issued further guidance to financial institutions on compliance with their BSA obligations.
FinCEN reminded financial institutions to continue their risk-based approach to compliance, and stated that it would continue to assist reasonable risk-based measures by financial institutions in light of current challenges to compliance with their BSA obligations. In addition, it delayed implementation of new cash reporting transaction requirements.
FinCEN also urged financial institutions to consider and implement innovative approaches to meeting their BSA/AML obligations, referencing a 2018 interagency statement specifically on that subject.
April 13 Frequently Asked Questions
On April 13, 2020, FinCEN released Frequently Asked Questions (FAQ), regarding financial institutions’ compliance with customer identification requirements in connection with the Paycheck Protection Program (PPP) established in the recently enacted Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Section 1106 of the CARES Act provides for forgiveness of up to the full principal amount of qualifying loans guaranteed under the PPP, provided the proceeds are used for certain purposes, such as payroll costs.
The FAQs provide guidance to financial institutions subject to BSA customer due diligence (CDD) rules on how to comply with the basic customer identification requirements and beneficial ownership of legal entities rule. These FAQs also are incorporated into FAQs issued by the Small Business Administration, which administers the program.
FinCEN has a dedicated webpage devoted to COVID-19: https://www.fincen.gov/coronavirus. It also has created a COVID-19 specific online contact mechanism, which can be accessed through its website, for financial institutions to communicate to FinCEN COVID-19-related concerns on BSA compliance.
Norton Rose Fulbright has established a webpage focused on the COVID-19 pandemic, offering a wide variety of information and training resources.