FinCEN Clarifies Beneficial Ownership Reporting Requirements for Premium Finance Cash Refunds

As advocated by ABA, the Financial Crimes Enforcement Network today issued an administrative ruling to provide relief for institutions from applying the beneficial ownership rule to premium finance products that allow for cash refunds. This action exempts these transactions from the rule’s requirement to collect beneficial ownership information.

Premium finance lenders provide short-term loans — typically to small businesses — to cover annual property and casualty insurance premiums by making an advance payment in full to an insurance carrier. The association previously called on FinCEN to exempt these arrangements from the beneficial ownership rule, given that they finance a product that FinCEN previously determined to present almost no money laundering risks, and given that the structure of these arrangements make them unlikely vehicles for money laundering.


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