HOUSE OF REPRESENTATIVES EXAMINES NEW FinCEN CDD RULE

On 18th May, Financial regulation News reported that the House Terrorism and Illicit Finance Subcommittee has held a hearing to discuss the implementation and enforcement of the new FinCEN new Customer Due Diligence (CDD) Rule intended to improve AML efforts and safeguard the US financial system.  It came into operation on 11th May.   The new Rule the CDD Rule amends Bank Secrecy Act regulations and clarifies and strengthens customer due diligence requirements for US banks, mutual funds brokers or dealers in securities, futures commission merchants, and introducing brokers in commodities.  It adds a new requirement for these covered financial institutions to identify and verify the identity the natural persons (beneficial owners) of legal entity customers who own, control, and profit from companies when those companies open accounts.  The CDD Rule has 4 core requirements.  It requires covered financial institutions to establish and maintain written policies and procedures that are reasonably designed to –

  • identify and verify the identity of customers;
  • identify and verify the identity of the beneficial owners of companies opening accounts;
  • understand the nature and purpose of customer relationships to develop customer risk profiles; and
  • conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information.

https://www.fincen.gov/news/news-releases/fincen-reminds-financial-institutions-cdd-rule-becomes-effective-today

https://financialregnews.com/house-examines-financial-crimes-enforcement-networks-anti-money-laundering-rule/

FINCEN GRANTS A 90-DAY EXEMPTION FROM THE BENEFICIAL OWNERSHIP RULE FOR CERTAIN FINANCIAL PRODUCT RENEWALS AND ROLLOVERS

Vedder Price reported on 18th May that on 16th May FinCEN issued an administrative ruling that provides covered financial institutions with a 90-day exemption from the beneficial ownership requirements with respect to certain financial products and services that automatically rollover or renew (e.g., CDs or loan accounts) and which were established before May 11th.

https://www.jdsupra.com/legalnews/bsa-aml-alert-fincen-grants-a-90-day-28108/

https://www.fincen.gov/news/news-releases/administrative-ruling-beneficial-ownership-requirements-legal-entity-customers

 

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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