Compliance Blog

Written by JiJi Bahhur, Regulatory Compliance Counsel

Yesterday, we discussed the release of FinCEN’s ANPR on customer due diligence (CDD).  The post gave you a taste of the elements that FinCEN seeks to incorporate into a codified CDD rule.  Today, I’d like to expand briefly on the third element – obtaining beneficial ownership information – since this is the only element FinCEN feels will impose new or additional requirements that financial institutions are not already obligated to enforce.  

Under existing FinCEN regulations, there are only two explicit situations that require financial institutions to obtain beneficial ownership information.  Further, there is guidance out there stating that there are other situations where obtaining such information is appropriate.  The ANPR considers, among other related items, expanding the requirement to obtain beneficial ownership information to all customers.  This element would also require verification of the beneficial owners’ identity pursuant to a risk-based approach.  FinCEN also anticipates that it will provide guidance on what a financial institution should do if it is unable to identify or verify a beneficial owner.  

Since this component of the CDD program rule would create a new express regulatory obligation on financial institutions, there are other related items that would need to be addressed under this element as well.  These items include the following:

• Potential Additional Definition of Beneficial Owner;
• Potential Exemptions from Beneficial Ownership Requirement;
• Beneficial Owners of Assets in Accounts Held by Intermediaries;
• Customer Acting as an Agent; and
• Obtaining and Verifying Beneficial Ownership Information.

Remember, NAFCU’s Regulatory Affairs team is working on a Regulatory Alert and will be seeking comments from NAFCU members.  In the meantime, you can access the ANPR here and here.

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NAFCU Member Call-In.  On Thursday, March 8th, NAFCU will be holding its first Member Call-In of 2012.  The call is free but registration is required.  This is a great way for NAFCU members to get an overview of a wide variety of issues.  Topics covered include legislative, regulatory, economic, compliance as well as global credit union issues.  For more information and to register, go here.