On February 13, 2026, FinCEN issued an Order providing “exceptive relief” to covered financial institutions (including banks, savings associations, and broker-dealers). The order simplifies the requirements for obtaining beneficial ownership information (“BOI”) for a legal entity customer each time the customer opens a new account. Under the Order, a covered financial institution is required to identify and verify the beneficial owners of an entity customer in only the following situations:
- When an entity first opens an account with the institution;
- When the institution has knowledge of facts that reasonably call into question the reliability of previously obtained BOI regarding that customer; or
- As otherwise required by the institution’s own risk-based procedures for ongoing customer due diligence (“CDD”).
This allows financial institutions to skip verifying beneficial owners each time an existing customer already known to the institution opens a new account unless required under one of the circumstances listed above. If an institution’s procedures require it to identify and verify a customer’s beneficial owners, it may rely on previously obtained BOI if the customer confirms (verbally or in writing) that the information is up-to-date and accurate. Covered financial institutions must continue to comply with all other applicable money laundering/countering the financing of terrorism (“AML/CFT”) requirements under the Bank Secrecy Act and related regulations, including having to monitor and report suspicious transactions and maintain and update customer information.
The exception applies to the CDD requirements adopted in 2016 (the “2016 CDD Rule”). FinCEN has determined that maintaining the existing CDD requirements with respect to customers already known to the financial institution imposed burdens without providing corresponding benefits to its AML/CFT efforts. FinCEN anticipates pursuing further changes to the 2016 CDD Rule through formal rulemaking, consistent with the obligations imposed by the Corporate Transparency Act.
The exception should prompt covered financial institutions to review their CDD practices, focusing on their BOI collection and verification procedures. Many may determine that verifying BOI information from current customers is more efficient than performing BOI reviews each time a new account is opened, but each institution should evaluate its procedures based on its own risk tolerance. Dickinson Wright stands ready to assist clients with this review process.