FAQs shed light on scope of new CDD requirements

July 20, 2016 -- “Frequently Asked Questions” (FAQs) to assist covered financial institutions in understanding the scope of the Customer Due Diligence (CDD) Requirements for Financial Institutions have been issued by the Financial Crimes Enforcement Network (FinCEN). The FAQs provide interpretive guidance with respect to the CDD rule.

The CDD rule was published May 11. It adds the requirement that financial institutions – including credit unions, banks, brokers or dealers in securities, mutual funds, futures commission merchants, and introducing brokers in commodities – “collect and verify the personal information of the real people (also known as beneficial owners) who own, control, and profit from companies when those companies open accounts.”

In its May release, Treasury stated that the final rule also amends existing Bank Secrecy Act (BSA) regulations to clarify and strengthen obligations of these entities.

The FAQs cover a variety of topics, including; purpose of CDD rule; rule application; covered financial institutions; CDD requirements with respect to beneficial ownership; amendments to the anti-money laundering (“AML”) program requirements; definition of beneficial owner – and more.


FinCEN FAQs on the CDD rule

NASCUS summary of final rule

Final Rule from the May 11 Federal Register

Treasury May 5 release on final rule (and other topics)