FinCen Issues FAQs on Customer Due Diligence Rule

July 22, 2016 at 11:20 am

Written by: Lindsay Harden

On Tuesday, the Financial Crimes Enforcement Network (FinCEN) issued Frequently Asked Questions regarding the new Customer Due Diligence rule.  Affected financial institutions must comply with the new rule beginning on May 11, 2018. This rule will apply to federally regulated banks and federally insured credit unions, among other financial entities, and it imposes heightened customer due diligence requirements as well as a new requirement that covered financial institutions must verify the identity of the beneficial owners of their legal entity customers.

The FAQs offer interpretive guidance that is helpful to understanding the rule. For instance, they clarify the meaning of terms like “beneficial owner” and “legal entity,” and discuss the various exceptions to the rule. In addition, they provide clarification that the rule does not cover existing accounts, and that financial institutions are generally not responsible for incorrect information provided by their customers with respect to the identities of beneficial owners. Click here to review the FAQs and prepare your institution for the Customer Due Diligence rule.


Entry filed under: Uncategorized.

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