Relief is Narrow, but FinCEN’s Explanation of Low Money Laundering Risk Posed by Lending Products is Instructive

On May 11, the Financial Crimes Enforcement Network (“FinCEN”) issued a ruling to provide exceptive relief from the application of the new Beneficial Ownership rule (the “BO Rule,” about which we repeatedly have blogged: see here, here and here) to premium finance lending products that allow for cash refunds.

Very generally, the BO Rule — effective as of May 11, 2018 — requires covered financial institutions to identify and verify the identity of the beneficial owner of legal entity customers at account opening. One exemption provided by the BO Rule from its requirements is when a legal entity customer opens a new account for the purpose of financing insurance premiums and the payments are remitted directly by the financial institution to the insurance provider or broker.  However, this exemption does not apply when there is a possibility of cash refunds.

In its May 11th ruling, FinCEN granted exceptive relief from the BO Rule to premium finance lenders whose payments are remitted directly to the insurance provider or broker, even if the lending involves the potential for a cash refund.  Although this exception is narrow when compared to the many other financial institutions covered by the broad BO Rule, FinCEN’s explanation for why the excepted entities present a low risk for money laundering is potentially instructive in other contexts, such as risk assessments undertaken by financial institutions for the purposes of their anti-money laundering (“AML”) compliance programs. Continue Reading FinCEN Provides Exceptive Relief from New Beneficial Ownership Rule

As 2017 winds down, we are taking a look back at the first year of Money Laundering Watch.

We want to thank our many readers around the world who have made Money Laundering Watch such a success since we launched it less than a year ago. The feedback we receive from financial industry professionals, compliance officers, in-house and external lawyers, AML/BSA consultants, government personnel, journalists, and others interested in this field is invaluable, and we hope you will continue to share your perspectives with us.  We pride ourselves on providing in-depth discussions of the important developments in this ever-evolving area and their potential implications.

2017 has been a busy year in the world of financial corruption. We are highlighting 12 of our most-read blog posts, which address many of the key issues we’ve examined this year.

We also would like to thank the other platforms that host our blog: Digital Currency & Ledger Defense Coalition, Money Laundering Bulletin, and Federal Tax Crimes.

We look forward to continuing to keep you informed in 2018.  If you would like to subscribe to Money Laundering Watch, please click here. To learn more about Ballard Spahr’s Anti-Money Laundering Team, please click here.

We are pleased to announce that Ballard Spahr has expanded the scope of our sister blog, the award-winning CFPB Monitor.  This expanded scope reflects that we strive to deliver the breaking news and insightful analysis you need to stay agile and informed in all aspects of the world of financial regulation and enforcement.

To keep you informed of the latest developments in the rapidly evolving regulation of consumer financial services, our new Consumer Finance Monitor – spearheaded by our partner Alan Kaplinsky and our many other colleagues at Ballard Spahr’s Consumer Financial Services group – includes the firm’s flagship CFPB Monitor, which continues to provide unparalleled coverage of the Consumer Financial Protection Bureau. The Consumer Finance Monitor also features the State CFS Monitor to cover important state agency and attorney general developments, and the Federal CFS Monitor to cover important developments in consumer financial services at the FTC, the FCC, the DOJ, and the federal bank regulatory agencies (OCC, FDIC, FRB, and NCUA).

Please check out this new expanded blog, which is an excellent counterpart to our own focus on money laundering.

If you would like to remain updated on these issues, please click here to subscribe to Money Laundering Watch.