FinCEN Proposes Enhanced Customer Due Diligence Requirements

5 August 2014
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Key takeaways:

  • FinCEN has issued proposed rules to codify and strengthen existing customer due diligence requirements for covered financial institutions, which includes banks, securities broker-dealers, mutual funds and futures commission merchants and introducing brokers in commodities.
  • The most significant new requirement in the proposed rule would be the obligation for covered financial institutions to identify and verify the identity of natural persons who are the beneficial owners of certain legal entity customers, which would apply to legal entity customers that open new accounts with covered financial institutions starting one year after a final rule is adopted.
  • The proposed rule would also amend existing anti-money laundering program requirements to require covered financial institutions to understand the nature and purpose of an account and to conduct ongoing monitoring to maintain and update customer information and to identify and report suspicious transactions.