Payment Protection Program and AML

As part of the Coronavirus Aid, Relief, and Economic Security Act ("CARES"), the Small Business Administration (“SBA”) started the Paycheck Protection Program (“PPP”) on April 3, 2020, to provide support to small business affected by COVID-19.

The objective of the program is to provide assistance to small businesses to retain workers and maintain payroll as well as make payments for rent, mortgage interest, lease, and utilities. While the initial $349 billion in loans has already been claimed, on April 21 the senate approved  an additional coronavirus relief package that provides an additional $310 billion. It is expected to be signed into law later this week. 

SBA-certified lenders, federally insured depository institutions, credit unions, and Farm Credit System institutions are able to provide PPP loans. Many of these traditional banks have not been accepting PPP Loan Applications, while others have stopped taking them, or are processing applications only for existing clients.

In addition to the above listed institutions, the PPP allows for additional lenders to make loans once approved by the SBA and there is an interest from managers in private debt to become PPP lenders to help small businesses. However, the SBA requires that prior to engaging in PPP lending, an entity needs to establish an AML compliance program equivalent to that of a comparable federally regulated institution, that includes, at a minimum a customer identification program and customer due diligence procedures.

How ACA Can Help

ACA works with asset managers, private funds and broker-dealers to ensure they meet the requirements of applicable US AML regulations. ACA assists with the establishment of risk-based, tailored AML programs. ACA also conducts independent tests of AML programs to meet regulatory requirements and industry best practices.

In addition, ACA helps with firms’ customer and investor identification programs and risk assessments that meet customer due diligence requirements established by FinCEN. ACA helps in key aspects of these requirements including conducting identity validation, including those for beneficial owners and control persons, checking against sanctions and high-risk databases, and carrying out ongoing investor monitoring.

For More Information

If your firm or an affiliate plans to become a PPP lender to support small business customers, ACA Compliance Group (“ACA”) is able to assist with the anti-money laundering (AML) compliance program requirement.

If you have questions or would like to discuss our AML solutions, please contact your regular ACA Consultant, Alvaro Soto, or Nicole Morton.