BSA changes on the horizon: A look at the 2021 NDAA

On Friday, Congress passed 2021’s National Defense Authorization Act (NDAA). While President Trump has threatened to veto the law, it is believed there may be enough support in congress to override a presidential veto. This enormous law touches on many issues relating to the U.S. military and national security. However, Division F contains provisions affecting credit unions, as it requires major changes from FinCEN and the Treasury Department regarding the Bank Secrecy Act (BSA). Let’s dive into what’s in the bill:

Changes to Beneficial Ownership Requirements. The NDAA includes the “Corporate Transparency Act,” which enacts significant changes to the requirements for tracking beneficial ownership of a business or legal entity. These changes will make FinCEN’s rules regarding beneficial ownership less burdensome for credit unions, and instructs FinCEN to, within 1 year of enactment, revise the Customer Due Diligence (CDD) rule to conform to this law, presumably by removing the requirement for financial institutions to collect beneficial ownership information.

The Corporate Transparency Act retains the same definition of beneficial owner as the CDD rule, but instead aims to set a “federal standard” for obtaining ownership information during the incorporation process. Specifically, it requires all new corporations, LLCs, or similar entities formed after enactment to provide a report of their beneficial owners to FinCEN. Corporations, LCCs or similar entities that were already in existence at the time of the NDAA’s enactment will be required to submit a report of their beneficial owners to FinCEN within two years. The report should include the full name, date of birth, residential or business address and a unique identifying number for each beneficial owner. The Corporate Transparency Act also creates a process through which FinCEN can provide a unique identifying number. Entities will be required to update FinCEN when there are changes to the required information (the law says changes must be reported within 1 year, but then gives FinCEN the power to set a shorter deadline). The law also states FinCEN should try to partner with state, local and tribal governments to obtain information under existing processes. The information will be retained by FinCEN and can be disclosed to credit unions and other financial institutions when a request is made to facilitate compliance with CDD requirements.


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