Customer Due Diligence & Beneficial Owner Final Rule

We’ve been waiting for it and now it’s finally here! The final rule on Customer Due Diligence requirements and Beneficial Owner information has been submitted by FinCEN and will be published in theDeb11 Federal Register today (May 11, 2016).

The final rule will “clarify and strengthen customer due diligence requirements for banks” (and brokers or dealers in securities; mutual funds; and futures commission merchants and introducing brokers in commodities). The rules will include explicit customer due diligence requirements and a new requirement to identify and verify the identity of beneficial owners of legal entity customers (subject to certain exemptions). In a nutshell, banks will have to use their Customer Identification Program procedures to verify the identity of beneficial owners. The rule allows banks to rely on information provided by the customer who is opening the account.

The rules will be effective 60 days after publication (July 11, 2016). Yep…effective in July! While the rule is effective in July, covered financial institutions must be in compliance with the new rules by May 11, 2018, two years after publication.

Rest assured, Bankers Compliance Consulting will be reading and interpreting the new rules (227 pages) and condensing it into plain English. You can expect a summary of the final rule in a future edition of our newsletter, “Banking on BCC”.

Deb Irving

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