FinCEN's Beneficial Ownership Rule: New Due Diligence Requirements for Customer Ownership and Control

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, June 26, 2018

Recorded event now available

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Program Materials

This CLE webinar will examine FinCEN’s new regulation, “Customer Due Diligence Requirements for Financial Institutions,” known as the “CDD Rule,” “Beneficial Ownership Rule,” or “Beneficial Owner Rule” (Rule) and how it will impact anti-money laundering (AML) procedures of banks and other covered financial institutions (CFIs) that must comply with the Bank Secrecy Act. The topics discussed by the webinar panel will include recent FAQ guidance on the Rule provided by FinCEN, and the added complexities that arise for parties making and receiving money transfers.

Description

The Rule, with a mandatory compliance date of May 11, 2018, can not only affect CFIs but also have a ripple effect on other entities, like FinTech companies that provide AML services. Under the Rule, CFIs must collect information from a legal entity customer on each individual who directly or indirectly owns 25% or more of the equity interest of the legal entity and an individual with management control over the legal entity. Counsel should prepare to advise CFIs on the intricacies of these requirements.

Although these beneficial ownership provisions form the part of the Rule that has attracted perhaps the most attention, the Rule goes beyond those requirements to impose comprehensive customer due diligence (CDD) requirements. Overall, the Rule requires CFIs to establish and maintain written policies and procedures that are reasonably designed to (1) identify and verify the identity of customers; (2) identify and verify the identity of the beneficial owners of companies opening accounts; (3) understand the nature and purpose of customer relationships to develop customer risk profiles; and (4) conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information.

On Apr. 3, 2018, FinCEN issued new FAQs on the Rule that confirm the need to look upstream through all relevant tiers of ownership to the individual owners of each legal entity customer. The FAQs provide guidance on other matters, including customer information which must be collected, record retention, and procedures which must be followed for multiple accounts or account renewals.

Listen as our authoritative panel analyzes the Rule and its impact on the AML programs of CFIs.

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Outline

  1. Elements of the Rule
    1. Individual(s) with 25%+ direct or indirect ownership
    2. 1 individual with management control
    3. Key aspects of the broader CDD requirements
  2. Nuances as outlined in FAQs
    1. Process and method of verification
    2. Required information
    3. Existing customers who open new accounts, multiple accounts
    4. Account renewals and rollovers—treated as new accounts
    5. Record retention
  3. Implementation & compliance challenges
    1. Incorporating the Rule’s provisions into a robust AML program

Benefits

The panel will review these and other critical issues:

  • How does the Rule alter due diligence requirements for bank customers that are legal entities?
  • What are the elements of a robust, compliant AML program, and how should existing procedures be modified to incorporate the Rule?
  • What are the additional insights in FinCEN’s recent release of FAQs regarding the Rule?
  • The Rule provides a compliance floor; what will regulators see as the ceiling? Is there one?

Faculty

Khalil, Elizabeth
Elizabeth A. Khalil, CIPM, CIPP/US, CIPP/EU

Member
Dykema Gossett

Ms. Khalil focuses her practice on all aspects of regulatory compliance and risk management for the financial services...  |  Read More

Welch, Samantha
Samantha Welch

Director
Navigant Consulting

Ms. Welch is a director in the firm’s Global Investigations and Compliance Practice. She works with financial...  |  Read More

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