FinCEN Streamlines Beneficial Ownership Requirements

What Is New?

The Financial Crimes Enforcement Network (FinCEN) issued an order on February 13, 2026, granting exceptive relief permitting covered financial institutions to forgo identifying and verifying beneficial owners of existing legal entity customers at every new account opening, as required by the Customer Due Diligence Requirements for Financial Institutions Rule (“CDD Rule”). Institutions now must conduct this verification under risk-based criteria in the following circumstances:

1. The legal entity customer first opens an account.
2. New information undermines the reliability of existing customer data.
3. Risk‑based, ongoing customer due diligence procedures trigger an event-driven review requiring an update to beneficial ownership information.

The CDD Rule was originally designed to address a significant gap in US anti-money laundering (AML)/countering the financing of terrorism (CFT) defenses by preventing anonymous access to the financial system. To limit the burden on industry, FinCEN did not require retroactive application of the CDD Rule, instead opting to apply the requirements to each new account opened after the applicability date.

This shift responds to longstanding industry concerns that the account‑by‑account verification model was burdensome without improving AML/CFT effectiveness. The new relief aligns with FinCEN’s mandate to modernize the CDD Rule pursuant to the Corporate Transparency Act (CTA) and streamline requirements while maintaining core AML obligations. Financial institutions should expect that this relief will inform forthcoming rulemaking and assess how it affects current CDD operations and controls.

Highlights

Prior to this relief, covered financial institutions were required to identify and verify the beneficial owners of legal entity customers at each new account opening. Even longstanding, low‑risk customers opening multiple accounts with no indication of a change in beneficial ownership were required to resubmit or reconfirm beneficial ownership details. Institutions and trade groups repeatedly emphasized that duplicative recertifications created operational strain, misallocated compliance resources, and did not materially enhance risk management.

FinCEN attempted incremental mitigations through frequently asked questions and targeted relief, such as certificate of deposit (CD) rollovers, but industry commentary continued to highlight the inefficiencies and lack of risk alignment in an account‑level trigger.

Under FinCEN’s exceptive relief, beneficial ownership identification and verification is now required in three circumstances, as noted above: the initial account opening by a legal entity customer, any situation in which new facts call prior beneficial ownership information into question, and any risk‑based trigger identified through ongoing monitoring procedures. Institutions may rely on previously obtained information so long as the customer certifies verbally or in writing that the data remains accurate and record of the confirmation or certification is maintained. This relief reflects the US Department of the Treasury’s broader modernization strategy, prioritizing risk‑based compliance and reducing unnecessary regulatory burden. Institutions still may apply more conservative practices if aligned with their risk profile, but the account‑based requirement is no longer the regulatory standard. FinCEN expects this relief to support revisions to the CDD Rule under the CTA.

What This Means for Your Organization

Institutions should review their CDD programs promptly to consider alignment with the risk‑based framework articulated in the order, including potential to streamline onboarding processes for existing legal entity customers, where appropriate. Key adjustments may include revising account‑opening procedures to eliminate automatically requiring recertification for existing customers absent any belief the information on file is no longer accurate, strengthening ongoing monitoring triggers, enhancing documentation and recordkeeping practices for customer attestations, and ensuring staff are trained on the revised identification and verification requirements.

Importantly, institutions should evaluate their risk‑based methodologies to ensure they continue capturing events or behaviors that necessitate refreshed beneficial ownership information under the updated expectations to avoid missing a necessary update to customer information. Given that this relief anticipates further rulemaking under the CTA, institutions should prepare for additional modernization of the CDD Rule and consider the long-term design of their AML programs.

BRG’s Financial Institution Advisory team is well positioned to assist institutions in evaluating existing CDD frameworks, updating policies and procedures, assessing operational impacts, and preparing for forthcoming rulemaking. We can support your organization in conducting gap analyses, redesigning workflows, and implementing effective change management to ensure a smooth transition to the new risk‑based paradigm.