The Loan Syndications and Trading Association ("LSTA") updated its guidance for customer identification procedures applicable to syndicated lending facilities to reflect FinCEN's Beneficial Ownership Rule.
As previously covered, the Beneficial Ownership Rule went into effect on May 11, 2018, and requires "covered financial institutions" to obtain information on the beneficial owners of a legal entity that opens a new account for each new formal banking relationship established, even if the legal entity is an existing customer. LSTA's updated guidance clarifies that primary lenders "would not typically be required" to verify the identity of "guarantors" under the applicable credit agreements.
Commentary / Danielle Katz
Lending institutions continue to adjust their internal policies and procedures to comply with relatively new anti-money laundering and "know your customer" rules and regulations in a manner intended to minimize the administrative burden of such compliance. Guidance from the LSTA on these matters is an important barometer of market-accepted practices.
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