The long-awaited changes to the Bank Secrecy Act’s customer due diligence requirements go into effect this Friday, May 11. Although many credit unions may not deal with the type of sophisticated entities that this regulation is designed to address, they will still need policies and procedures in place that respond to this guidance.
The Financial Crimes Enforcement Network began laying the groundwork for these changes in 2012 by issuing an advance notice of proposed rulemaking. FinCEN then issued a proposed CDD rule in 2014 and the final rule was issued in 2016.
The new rules require covered financial institutions to identify and verify the identity of beneficial owners of customers/members each time a new account is opened. The financial institution may rely on copies of identity documents supplied by the customer as long as they believe the information is reliable. The final rule also requires anti-money laundering programs to explicitly include risk-based procedures for conducting ongoing CDD and developing a customer risk profile.
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