Banking and Finance Law Daily Wrap Up, BANK SECRECY ACT—FinCEN consolidates and updates Customer Due Diligence FAQs, (May 7, 2026)

By George M. Gullo, J.D.

The reissued FAQs reflect FinCEN’s effort to consolidate prior guidance following the Account Opening Exceptive Relief Order.

On May 6, 2026, the Financial Crimes Enforcement Network (FinCEN) reissued and updated its consolidated Frequently Asked Questions (FAQs) addressing the Customer Due Diligence Requirements for Financial Institutions (the CDD Rule). The updated FAQs consolidate prior guidance issued in 2016, 2018, and 2020 into a single document and, importantly, aligns existing interpretations with FinCEN’s Feb. 13, 2026, Account Opening Exceptive Relief Order (see Banking and Finance Law Daily, May 6, 2016, July 20, 2016, Apr. 4, 2018, Aug. 4, 2020, and Feb. 13, 2026).

FinCEN emphasizes that the consolidated FAQ is intended for clarification, not amendment. The CDD Rule itself remains unchanged. Rather, the FAQs explain how covered financial institutions may apply existing CDD Rule requirements—particularly beneficial ownership identification and verification obligations—in light of the narrowly tailored exceptive relief now available at account opening.

Purpose and scope. As reiterated in the FAQs, FinCEN issued the CDD Rule to clarify and strengthen customer due diligence obligations under the Bank Secrecy Act (BSA). The Rule imposes explicit requirements on covered financial institutions to implement risk-based customer due diligence procedures, including the identification and verification of beneficial owners of legal entity customers, subject to defined exclusions and exemptions. FinCEN continues to stress that legal entity customers must identify their ultimate beneficial owners, not nominees or straw persons.

Beneficial ownership. The FAQs reaffirm that covered financial institutions must maintain written procedures reasonably designed to identify and verify beneficial owners of legal entity customers by incorporating verification elements equivalent to those used under applicable customer identification program (CIP) rules. Consistent with the Account Opening Exceptive Relief Order, the FAQs clarify that covered financial institutions may, but are not required to, limit beneficial ownership identification and verification to the following circumstances:

1. When a legal entity customer first opens an account with the institution;

2. When the institution becomes aware of information that reasonably calls into question the reliability of previously obtained beneficial ownership information; and

3. As needed based on the institution’s risk-based procedures for conducting ongoing customer due diligence.

FinCEN underscores that whether to rely on the exceptive relief is a matter of institutional discretion. Institutions may continue to identify and verify beneficial owners at each new account opening if they choose.

Accounts. The FAQs maintain alignment between the CDD Rule and CIP definitions of “account” and “new account.” Beneficial ownership identification and verification generally applies to new accounts opened on or after May 11, 2018. However, in light of the exceptive relief, the opening of an additional account for an existing legal entity customer does not, by itself, require re-identification or re-verification of beneficial owners, absent a risk-based trigger. The FAQs also restate existing limitations and exemptions for certain low-risk account types, including point-of-sale credit accounts, equipment financing arrangements, and certain insurance and postage-related accounts, subject to specified conditions.

Certification form. The optional Certification Form (Appendix A to the CDD Rule) remains one permissible method for collecting beneficial ownership information, but its use is not mandatory. Financial institutions may rely on alternative means that satisfy the Rule’s substantive requirements. The FAQs clarify record-retention obligations, including five-year retention periods tied to account closure or record creation, and explain how institutions may rely on previously collected and updated beneficial ownership information when opening subsequent accounts for the same legal entity customer, provided required certifications or confirmations are obtained and documented.

Legal entity customers. The consolidated FAQs restate the definition of “legal entity customer” and confirm exclusions for certain regulated entities, U.S. publicly traded companies, nonprofits, governmental entities, and specified foreign institutions. FinCEN reiterates that:

• Entities listed solely on foreign exchanges are not excluded;

• Nonprofit entities remain subject to the control prong, despite lacking ownership interests; and

• Financial institutions may generally rely on customer representations regarding exclusions, absent knowledge calling their reliability into question.

The FAQs also clarify the treatment of trusts, pooled investment vehicles, sole proprietorships, unincorporated associations, and state-owned enterprises, largely reaffirming prior guidance.

Current obligations. The FAQs reiterate that the CDD Rule does not alter obligations under Office of Foreign Assets Control sanctions programs, Section 314(a) information-sharing requirements, or currency transaction reporting rules. Beneficial ownership information should be used consistently with existing compliance obligations, but does not, by itself, create new reporting requirements.

Conclusion. The consolidated FAQs reflect FinCEN’s effort to streamline and clarify prior guidance and to explain the practical application of the CDD Rule following issuance of the Account Opening Exceptive Relief Order. While the Rule’s foundational requirements remain unchanged, the FAQs emphasize discretion and risk-based judgment in the identification, verification, and updating of beneficial ownership information, consistent with FinCEN’s long-standing approach to customer due diligence under the BSA.

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