On 11th May, coinciding with the introduction of the new Customer Due Diligence Requirements for Financial Institutions” Rule issued by FinCEN, the Federal Financial Institutions Examination Council (FFIEC) issued new customer due diligence (CDD) and beneficial ownership examination procedures.  The new Rule clarifies CDD requirements and also includes a new requirement for covered financial institutions to identify and verify the identity of beneficial owners of certain legal entity customers.  The FFIEC is a formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions.  The separate attachments for CDD and beneficial ownership checks state as their objectives –

  • Assess the bank’s compliance with the regulatory requirements for customer due diligence; and
  • Assess the bank’s written procedures and overall compliance with regulatory requirements for identifying and verifying beneficial owner(s) of legal entity customers.

The guidance explains just who the “legal entity customers” would be, record and retention requirements, identification and verification requirements (including where relying on third parties).

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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