FinCEN’s Exceptive Relief on Beneficial Ownership Requirements: What It Means for Banks and Credit Unions

Holly Wilson – Senior Compliance Auditor
On February 13, 2026, the Financial Crimes Enforcement Network (FinCEN) issued a regulatory update that eases one of the most burdensome aspects of the 2016 Customer Due Diligence (CDD) Rule—the requirement to identify and verify the beneficial owners of a legal entity customer every time the customer opens a new account. This update marks a shift toward a more modern, risk based approach to customer due diligence.

Why FinCEN Issued the Relief
Since the original CDD Rule took effect, financial institutions have long raised concerns about the duplicative work required under the previous framework. Corporate clients opening multiple accounts were forced to repeatedly certify the same beneficial ownership information, creating compliance friction with minimal anti money laundering benefit.
FinCEN acknowledged these concerns and stated that the new relief “supports a more efficient, risk based approach to customer due diligence and reduces unnecessary regulatory burden without weakening the foundational requirements that protect the U.S. financial system.”

What the Exceptive Relief Changes
Under the Exceptive Relief Order (FIN 2026 R001), covered financial institutions no longer need to identify and verify the beneficial owners of a legal entity customer at each new account opening. Instead, verification is now required only in the following scenarios:
Initial Account Opening
Institutions must collect and verify beneficial ownership information only when the customer first establishes a relationship.
When Reliability is Called into Question
If the institution becomes aware of information that reasonably calls into doubt the accuracy of previously obtained beneficial ownership data, it must update and re verify as needed.
Based on Risk Based Ongoing Due Diligence Procedures
Institutions must continue to apply their own risk based monitoring frameworks, conducting reverification when their policies deem it appropriate.
In these cases, institutions may rely on previously collected information if the customer confirms verbally or in writing that it remains accurate.

What Does Not Change
The relief does not alter broader Bank Secrecy Act (BSA) and anti-money laundering (AML) obligations. Financial institutions remain fully responsible for:
• Ongoing monitoring for suspicious transactions
• Maintaining and updating customer information on a risk basis
• Filing Suspicious Activity Reports (SARs) as required
FinCEN emphasized that this update should not be seen as permission to relax core AML/BSA vigilance.

Looking Ahead
FinCEN has indicated that additional revisions to the 2016 CDD Rule may follow via formal rulemaking. These future changes may further streamline compliance processes as FinCEN continues modernizing the U.S. AML framework.

Conclusion
The exceptive relief is optional for institutions to use. If your institution does want to use the relief, it should first review its own BSA policies and procedures and update as necessary to reflect the changes. CSG staff can help. With highly knowledgeable auditors and consultants, we are here for you. Contact us if you are looking for assistance with implementing changes associated with this update, a BSA/AML/CFT audit, or any other regulatory compliance audit.

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