In the September 2018 edition of the National Association of Minority and Women Owned Law Firms (“NAMWOLF”) Newsletter, Jacklyn Fetbroyt, Member of KHF, writes Firm FinCEN’s Customer Due Diligence Rule and Implementation.
In 2016, the Financial Crimes Enforcement Network (FinCEN) issued its final rule on customer due diligence and beneficial ownership requirements (the “CDD Rule,” 31 CFR Parts 1010, 1020, 1023, et al.), promulgated under the Currency and Foreign Transactions Reporting Act of 1970, as amended by the USA PATRIOT Act of 2001 and other legislation, which legislative framework is commonly referred to as the ‘‘Bank Secrecy Act.” Notably, the Bank Secrecy Act lacks a requirement that financial institutions know the identity of the beneficial owners of their accounts – i.e., the individuals who control legal entity customers – which therefore allow a shield of anonymity for the beneficial owners. To address this perceived weakness and the limit the money laundering that it enabled, FinCEN issued the CDD Rule on May 11, 2016, and it became effective on July 11, 2016; however, covered financial institutions—including federally regulated banks, federally insured credit unions, mutual funds, brokers and dealers in securities, futures commission merchants, and introducing brokers in commodities—had until May 11, 2018, to come into full compliance with the CDD Rule. Continue reading →