CDD Rule: Beware of events that may trigger beneficial ownership reviews

I have exciting news to share; on Friday I became a Certified Anti-Money Laundering Specialist through ACAMS. This is a great milestone for me and nothing could commemorate this accomplishment better than a BSA blog.  Enjoy!

As the Customer Due Diligence (CDD) rule’s implementation date gets closer, we have seen an increase in questions regarding the types of events that may lead a credit union to review the beneficial ownership information of an existing account. So we thought it would be helpful to go over the rule’s requirements and give examples of potential triggering events. Before we dig in, remember that the definition of a beneficial owner includes two prongs—ownership and control—so when talking about updating information on beneficial owners, we are referring to both prongs.

The 5th pillar of BSA compliance established by the final rule requires that credit unions include in their anti-money laundering (AML) programs, CDD procedures for the purpose of developing a member risk profile and conducting ongoing monitoring of these relationships. See, 81 Fed. Reg. 29449. Before you sound the alarm at your credit union, it is important to know that the final CDD rule does not impose a categorical requirement to regularly update the beneficial ownership information on an existing account. See, 81 Fed. Reg. 29421. However, as part of the on-going monitoring, credit unions may encounter some events that could lead the credit union to believe that there has been a fundamental change to the ownership of the account and hence trigger a review of beneficial owners. See, 81 Fed. Reg. 29399.


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