On February 13, 2026, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an exceptive relief order that streamlines customer due diligence (CDD) requirements for financial institutions under FinCEN’s 2016 CDD Rule. The order allows financial institutions to limit the identification and verification of beneficial owners so that such review does not need to occur each time a legal entity customer opens a new account. Rather, such requirements will only exist moving forward under certain circumstances, as laid out below. The exceptive relief order is designed to address what FinCEN has characterized as a “burdensome and duplicative regulatory requirement.”

Under the order, financial institutions are now required to identify and verify the beneficial owners of a legal entity customer in only the following circumstances:

• When a legal entity customer first opens an account with the financial institution;
• When the financial institution has knowledge of facts that reasonably call into question the reliability of previously obtained beneficial ownership information; and
• As otherwise required based on the financial institution’s risk-based procedures for ongoing customer due diligence.

As to the third scenario, the order notes that the financial institution may rely on beneficial ownership information previously submitted by the legal entity customer, so long as the customer certifies or confirms, verbally or in writing, that the information is still accurate. The financial institution must maintain a record of such certification or confirmation. If the customer is unable to certify or confirm, or if the financial institution has knowledge of facts that would reasonably call into question the reliability of previously obtained beneficial ownership information, then the financial institution must obtain and verify the identity of the legal entity’s owners as required under the CDD rule.

Background

As described in the order, prior to the 2016 CDD Rule, financial institutions were not required to know the beneficial owners of their legal entity customers. The 2016 CDD Rule then required financial institutions to identify the beneficial owners of each legal entity customer “at the time a new account is opened.” FinCEN defined “new account” to mean “each account opened.” The 2016 CDD Rule further required financial institutions to verify the identity of each beneficial owner of the legal entity customer “within a reasonable time after the account is opened.” These requirements applied regardless of the amount of time between account openings or whether the financial institution had knowledge of facts that may reasonably call into question the reliability of previously obtained beneficial ownership information about the legal entity customer.

Following the 2016 CDD Rule, FinCEN took initial steps to limit the burden of beneficial ownership review for financial institutions. In 2018, FinCEN issued FAQs that included guidance on identity verification requirements when a legal entity beneficial owner was already a verified customer of the financial institution (FAQ 7). While noting that verification requirements applied to each subsequent account opening, FinCEN stated that if a beneficial owner was already a customer of the financial institution and had been verified pursuant to that financial institution’s Customer Identification Program (CIP), then the financial institution could rely on the identity and verification information it had in its possession to fulfill its beneficial owner CDD requirements, so long as the customer certified or confirmed that the information was still accurate, and the financial institution had no knowledge of facts that would reasonably call into question the information’s reliability. Then, in 2020, FinCEN determined that federally insured depository institutions and federally insured credit unions were generally not required to re-verify beneficial ownership information for existing customers receiving Paycheck Protection Program (PPP) loans.

The order clarifies that the extent to which a financial institution avails itself of such relief is within the discretion of the financial institution.

FinCEN attributes its additional relief for beneficial ownership reviews to Executive Order 14192, Unleashing Prosperity Through Deregulation, as well as FinCEN’s obligations under the Corporate Transparency Act (CTA) to revise the 2016 CDD Rule. FinCEN was required under the CTA to issue a proposed rule change to the 2016 CDD Rule by January 1, 2025. While that rule proposal has not yet been issued, FinCEN stated that it expected to still pursue rulemaking to revise the 2016 CDD Rule.

Analysis

Financial institutions that choose to take advantage of this relief will want to update their policies, procedures, and controls on beneficial ownership reviews, as well as their broader CDD and CIP systems. Such updates may allow financial institutions to streamline the account opening process by relying on previously collected information, but financial institutions should make a risk-based determination based on their current program as to whether requiring customer certification or confirmation and recordkeeping of such, in lieu of beneficial ownership reviews, allows for a more efficient onboarding process. In this regard, FinCEN noted that the relief is not intended to discourage covered financial institutions from exceeding minimum compliance requirements when doing so aligns with their risk profile and tolerance.

Conclusion

As Treasury and FinCEN continue to modernize AML compliance to maintain the BSA’s risk-based framework with greater efficiency,¹[1] See, e.g., FinCEN Relaxes Suspicious Activity Reporting Requirements Via Four New FAQs (Oct. 15, 2025); Fed Follows Earlier OCC, FDIC, and NCUA Orders Allowing Banks to Collect TIN Information from Third Parties (Aug. 8, 2025). including through the expected CDD Rule amendments, King & Spalding is well equipped to advise clients subject to these requirements on compliance with their AML obligations.