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FinCEN Publishes Availability Notices for Due-Diligence Docs
Wednesday, December 30, 2015 6:40 AM

The Financial Crimes Enforcement Network (FinCEN) published a notice of availability for two documents related to the proposed Customer Due Diligence (CDD) Requirements for Financial Institutions, first published in August 2014.

The two documents, called the Regulatory Impact Assessment (RIA) and the Initial Regulatory Flexibility Analysis, are available on FinCEN’s website. Comments on the documents will be accepted through Jan. 25.

The proposed CDD requirements, which fall under the Bank Secrecy Act, would obligate covered financial institutions to:

  • Identify and verify the identity of customers;
  • Identify and verify the identity of beneficial owners of legal entity customers;
  • Understand the nature and purpose of customer relationships; and
  • Conduct ongoing monitoring to maintain and update customer information to identify and report suspicious transactions.

The comment period for the overall CDD proposal ended Aug. 4, 2014, during which FinCEN received a total of 135 comments.

A large number of the comments pointed out that, first, the rule lacked sufficient data to support the agency’s estimates of costs and, second, substantially underestimated the costs related to implementation and compliance.

After working with a number of financial institutions, FinCEN determined the costs would exceed $100 million annually. That total required the agency to conduct the RIA, and publish it, because the proposal had become an “economically significant action.”