FinCEN's customer due diligence rule: All systems go?
Overview
Earlier this month, the US Treasury’s Financial Crimes Enforcement Network (FinCEN) released a series of FAQs to provide clarity around complying with its customer due diligence (CDD) rule. The CDD rule is intended to help financial institutions avoid illicit transactions by providing greater insight into their customers’ identities and business relationships, and contains the first prescriptive regulatory obligation to identify and verify ownership information of legal entity customers.
Specifically, the rule requires that covered financial institutions collect beneficial ownership information for individuals: (a) with at least a 25% equity interest in the legal entity, or (b) with significant responsibility to control or manage the legal entity. Additionally, the rule requires that financial institutions understand the nature and purpose of the customer relationship and conduct ongoing monitoring for suspicious activity.
Click below to see our five key takeaways from FinCEN’s FAQs and our advice on what financial institutions should be doing now:
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