FinCEN CDD Rule now in effect!
Monday, May 14, 2018
FinCEN’s Customer Due Diligence (CDD) rule came into effect this past week on May 11, 2018. Credit unions are now required to comply with this new rule. This rule amends the Bank Secrecy Act (BSA), adding new requirements that covered financial institutions must establish and maintain written procedures that are reasonably designed to identify and verify the beneficial owners of legal entity customers.
The newest requirement under the new rule is the identification of beneficial ownership. When opening an account for a legal entity, the credit union must identify beneficial owners of that legal entity. They must identify ownership, a person who owns 25% or more equity interest; and also control, a person that has significant responsibility to control the legal entity (such as a CEO, CFO, etc.). Information collected about the beneficial owner is similar to that already required under CIP and will include their name, date of birth, address and SSN or other government identification number.
The rule also allows for three methods in collecting the information. Credit unions have the option of using:
(1) The model form in the Rule (which are available in PDF or Word format);
(2) Using your own forms as long as they meet the rule requirements; or
(3) Obtaining the required information by other means, as long as the person opening the account can attest that the information is accurate.
More information can be found on League’s InfoSight (login required). The information includes FAQ, a checklist, and a CDD chart to help your credit union remain in compliance. Also, remember to incorporate the new requirements into your policy and procedures. Model policies can also be found on the League InfoSight page in the right-hand side column labeled “Additional Resources.”
League InfoSight: Customer Due Diligence and Beneficial Ownership
NCUA: FFIEC Issues New CDD and Beneficial Ownership Examination Procedures