According to a recent ACAMS publication, the White House budget office has announced the final version of the July 2014 proposed rule on beneficial ownership will be issued in August. The proposal sets out to clarify customer due diligence obligations and require financial institutions to identify the beneficial owners of corporate accounts. The rules will also incorporate the four core elements, known as “pillars” of anti-money laundering program (AML) requirements.
This proposal stemmed from an evaluation by the Financial Action Task Force (FATF) that determined the effectiveness of U.S. AML rules to be “noncompliant” or “partially compliant” with FATF’s recommendations on customer due diligence and beneficial ownership rules. Illicit actors from around the world are setting up companies in the U.S. for the purpose of moving or hiding dirty money because of the ease in which terrorists and criminals can obtain bank accounts in the names of “untraceable” shell companies formed in several U.S. states.
Stronger customer due diligence and the gathering of beneficial ownership information, will provide investigators leverage over corporate service providers who deliberately cover for financial criminals. If the information is required, and if meaningful enforcement action can be taken against the failure to produce or deliberate intention to mislead, then the anticipated result is that the people fronting for the bad actors will begin to talk, or they won’t want the job of acting as a front any more.
We will keep you posted on the developments with the final rule.