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FinCEN Issues ANPR on Customer Due Diligence Rules
Monday, August 4, 2014 6:35 AM

Last week, the Financial Crimes Enforcement Network (FinCEN) issued an advanced notice of proposed rulemaking (ANPR) on the long awaited Customer Due Diligence (CDD) standards.  FinCEN lists four key areas of focus for institutions in the ANPR:

  • Identifying and Verifying the Identity of Customers (CIP)
  • Identifying and Verifying the Identity of Beneficial Owners of Legal Entity Customers
  • Understanding the Nature and Purpose of Customer Relationships
  • Conducting Ongoing Monitoring to Maintain and Update Customer Information and to Identify and Report Suspicious Activity

One of the most important requirements in the proposed rule is for financial institutions to identify each natural person that either owns or controls a legal entity.  Institutions will be required to identify, at account opening, every person who owns at least 25 percent or more of the equity interests of a legal entity customer, and any person who exercises ultimate or effects control over the legal entity, and then verify this information. The new rules provide a standardized certification form to be used in collecting this information.  Institutions will also be required to have written procedures and recordkeeping requirements for identifying beneficial owners.

This proposed rule will be open for comment for 60 days from publication in the Federal Register.  

For the Federal Register posting, click here.