AFAICT (medium certainty), the development sequence went thusly: (1) MCAS added to design, (2) FAA informed about MCAS, (3) MCAS potential control inputs and overrides drastically increased during development, (4) FAA not informed about changes, (5) FAA certifies aircraft on basis of (2).

So it's probably most accurate to say "the FAA was aware of the system existing, but incorrect on the details of that system."