account is exempted.” (www.ffiec.
FAQs_for_CDD_Final_Rule_( 7_ 15_ 16).
pdf) Sounds easy, right? However, one of the
issues that has proven to be the most vexing within the
industry is, ironically, the definition of “new account” in the context above.
The “New Account” Conundrum
The CDD rule adopts the same basic definition of “account” as previously
expressed within the Customer Identification Program (CIP) rule issued in
2003. The FAQs to that rule, published in January 2004, noted the following:
“For purposes of the CIP rule, each time a loan is renewed or a certificate of
deposit is rolled over, the bank establishes another formal banking relationship and a new account is established.” ( www.fincen.gov/sites/default/files/
The second set of FAQs relevant to the CDD rule published by FinCEN
on April 3, 2018, confirms that the same stance applies to beneficial ownership. The response to Question 12 of those FAQs begins by quoting the
same verbiage from January 2004 and then specifies a financial institution’s
obligation: “For financial services or products established before May 11,
2018, covered financial institutions must obtain certified beneficial ownership information of the legal entity customers of such products and services
at the time of the first renewal following that date.” ( www.fincen.gov/sites/
Thus, for example, a certificate of deposit owned by a legal entity will become
a “new account” upon its first rollover after May 11, 2018.
Commercial loan renewals typically require involvement on the part of
financial institution associates, affording an opportunity for the collection of
beneficial ownership information on a possibly long-standing commercial
relationship. However, certificate of deposit renewals are often automatic, and