FinCEN Relaxes the Requirements to Identify the Beneficial Owners of an Institution’s Legal Entity Customers

By: John ReVeal, Jeremy M. McLaughlin, and Joshua L. Durham

On 13 February 2026, the Financial Crimes Enforcement Network (FinCEN) issued Order FIN-2026-R001 (the Order), granting exceptive relief from FinCEN’s requirement that covered financial institutions identify the beneficial owners of their legal entity customers.

The existing regulation requires covered financial institutions, as part of their customer due diligence procedures, to identify and verify the beneficial owners of their customers that are legal entities each time a new account is opened by the entity (with some narrow exceptions due to a 2018 FinCEN Order). The Order shifts the compliance trigger from a new account-based framework to a risk-based approach.

The financial institutions covered by the existing regulation and the Order are banks, brokers or dealers in securities, mutual funds, futures commission merchants, and introducing brokers in commodities. The existing regulation generally requires covered financial institutions to:

1. Identify beneficial owners of each legal entity customer at the time a new account is opened (e.g., when opening business checking account and opening a merchant services account, at the same bank); and

2. Verify those beneficial owners using risk-based procedures (e.g., cross-reference with outside information).

31 C.F.R. § 1010.230(b).

For example, banks would have to identify and verify the beneficial owners of a corporation every time that corporation opens an account (sometimes on the same day), even if the information has not changed.

The Order does not amend the existing regulation but provides exceptive relief to it. Under the Order, covered financial institutions are no longer required to identify and verify beneficial owners at each new account opening. Instead, identification and verification are required only in these three scenarios:

1. When a legal entity customer first opens an account with a covered financial institution;

2. Any time thereafter when the covered financial institution has knowledge of facts that would reasonably call into question the reliability of beneficial ownership information previously obtained about the legal entity customer; and

3. As needed based on a covered financial institution’s risk-based procedures for conducting ongoing customer due diligence.

Importantly, the Order states that when such ongoing risk-based procedures require a financial institution to identify and verify beneficial owners (scenario 3), the institution may rely on beneficial ownership information previously obtained “provided the customer certifies or confirms (verbally or in writing) that such information is up-to-date and accurate.” The institution also must record such certifications or confirmations.

For a couple practice notes, it is important to consider how an institution would have “knowledge” of facts that reasonably call into question the reliability of the previous beneficial owner information. For example, the addition of a new signatory to an account might create such knowledge.

Lastly, if relying on an individual’s certification that the institution’s beneficial ownership information is up-to-date and accurate, we think that the individual probably should be provided a copy of the prior beneficial owner certification before certifying or confirming that it is still accurate.