04 March 2018

US Corporate Law News: FinCEN's Bank Secrecy Act customer diligence rules become effective May 2018


Gregory Pun
Associate | US

On May 11, 2018, customer due diligence rules issued in May 2016 under the Bank Secrecy Act by the Financial Crime Enforcement Network (FinCEN) will go into effect. The final rules require covered financial institutions (defined as banks, brokers or dealers in securities, futures commission merchants and introducing brokers in commodities, and mutual funds) to identify and verify the identities of the beneficial owners of all legal entity customers who open new accounts on or after May 11, 2018. The financial institution may comply either by obtaining the required information on a standard certification form or by any other means that comply with the obligation's substantive requirements. A financial institution may rely on another financial institution for the performance of the requirement to maintain beneficial ownership records. The final rules also amend the anti-money laundering program requirements to explicitly include risk-based procedures for conducting ongoing customer due diligence, including understanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile. For more information, see https://www.federalregister.gov/documents/2016/05/11/2016-10567/customer-due-diligence-requirements-for-financial-institutions.

Gregory Pun Associate | Greenwich