The Bank Secrecy Act and Paycheck Protection Program Loans (Coronavirus and the Law)


A recent update to the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) FAQs clarifies the application of the know-your-customer and beneficial ownership requirements under the Bank Secrecy Act (BSA). Previous SBA FAQs merely stated that lenders making PPP loans are subject to BSA requirements.

[clear]Updated Answers from the SBA

The updated FAQs indicate if the lender makes a PPP loan to an existing customer and the lender previously verified beneficial ownership information for such a customer, the lender does not need to re-verify this information.

In addition, if a bank or credit union has not yet collected beneficial ownership information on an existing customer who applies for a PPP loan, the bank or credit union does not need to collect and verify beneficial ownership information in connection with such PPP loan, unless otherwise appropriate under the institution’s BSA risk-based approach.

The guidance essentially facilitates BSA compliance through the PPP requirement that a lender collect information for the application form on beneficial owners of 20% or more in the application.

With respect to new customers, a lender’s collection of the following information for all natural persons with a 20% or greater ownership interest in the applicant will satisfy the BSA’s beneficial ownership requirements:

  • Owner name
  • Title
  • Ownership percentage
  • Address
  • Date of birth

If any ownership of 20% or more belongs to a business or other legal entity, lenders will need to collect appropriate beneficial ownership information for that entity, according to the FAQs.

The SBA’s guidance is intended to ease BSA compliance to make the PPP loan application process more efficient.

Read more legal updates on COVID-19 from Woods Rogers attorneys.

Related Services

Jump to Page