FinCEN issues long-awaited guidance on the customer due diligence rule

Abstract

Purpose

To highlight pertinent points in the frequently-asked questions (FAQs) issued on April 3, 2018 by the US Treasury Department Financial Crimes Enforcement Network concerning its Customer Due Diligence Requirements for Financial Institutions (“CDD Rule”), which were published on May 11, 2016 and became effective on May 11, 2018.

Design/methodology/approach

Discusses clarification and guidance in the FAQs concerning beneficial ownership requirements for administrative and internal accounts, claims for exclusion from the definition of legal entity customer, information requirements for pooled investment vehicles, the requirement for beneficial ownership information from foreign publicly-traded companies, information requirements for existing customers, certification of beneficial ownership information when existing accounts are renewed, requirements for refreshing existing beneficial ownership information, retention of beneficial ownership records, aggregation for currency transaction reporting, and requirements to understand the nature and purpose of a customer relationship.

Findings

Covered financial institutions and industry associations have sought clarification and guidance on a range of topics, several of which have been addressed in the FAQs.

Originality/value

Expert guidance from lawyers focused on regulatory, compliance and transactional issues for financial institutions.

Citation

Kini, S.M., Dura, R.T. and Reyes Acosta-Grimes, Z. (2018), "FinCEN issues long-awaited guidance on the customer due diligence rule", Journal of Investment Compliance, Vol. 19 No. 4, pp. 13-16. https://doi.org/10.1108/JOIC-06-2018-0044