Letter to FinCEN on the PRA Burden for Legal Entity BOI Collection under the CDD Rule

Dear Director Gacki:

The American Bankers Association (ABA) appreciates the opportunity to comment on the Paperwork Reduction Act (PRA) request for comment published by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). FinCEN seeks renewal, without change, of the existing information collection requirements relating to beneficial ownership requirements for legal entity customers established by FinCEN’s 2016 customer due diligence (CDD) rule, as incorporated in Appendix A to the CDD rule (Certification Regarding Beneficial Owners of Legal Entity Customers).

I. Summary of the Comment

The PRA requires federal agencies to seek approval (or as here, reapproval) from the Office of Management and Budget (OMB) before collecting information from the public. In pursuit of OMB approval, an agency must demonstrate that it has accurately assessed the costs of each paperwork burden, balanced these costs and benefits, considered the need for and utility of each individual paperwork requirement, and minimized the collection burden of the information collection request. 

ABA supports the goals of the PRA, and FinCEN’s data solicitation, and offers feedback on FinCEN’s initial estimates based on information and poll data collected from our members. Our comments, however, have a broader objective: to inform FinCEN’s anticipated revision of the CDD rule, which is required as part of the sweeping reforms of the Anti-Money Laundering Act of 2020 (AMLA).  Before FinCEN proposes revisions to the CDD rule, it must accurately understand how—and how often—banks are compelled to collect beneficial ownership information on legal entity customers; how FinCEN’s beneficial ownership reporting rule renders certain CDD information collection by banks unnecessarily duplicative; and what works about the CDD rule and what does not.

FinCEN’s burden estimates of 20 minutes to update and maintain CDD procedures, and between 40-120 minutes (with an average of 80 minutes) to "identif[y], verif[y]...review and [keep] record[s]," of beneficial ownership information of legal entity customers are both too low. Even if those estimates were accurate —and an April poll of our members of all sizes, nationwide, revealed they are not— FinCEN substantially underestimates the number of times a bank must engage in this process. Banks do not open 1.5 new legal entity accounts per business day, as originally estimated by FinCEN in 2016; this eight-year-old estimate is a massive undercount, for even the smallest community banks.

Download the comment letter to read the full text.