Matching CDD rules proposed for institutions without federal oversight

Aug. 26, 2016 -- Credit unions, banks and other financial institutions lacking a “federal functional regulator” would be subject to new identification programs, anti-money laundering programs, and beneficial ownership requirements to match recently issued “Customer Due Diligence” (CDD) rules, under a proposed rule by the Financial Crimes Enforcement Network (FinCEN).

The agency stated that it was making the proposal to “ensure consistent Bank Secrecy Act (BSA) coverage across the banking industry” for those institutions without the “federal functional regulator” to “establish and implement Anti-Money Laundering Programs.” The agency stated that it was also proposing extensions of the Customer Identification Programs (CIP) and beneficial ownership requirements consistent with recently implemented CDD amendments to those financial institutions not already subject to the requirements.

FinCEN estimated there are 740 of financial institutions nationwide without a “federal functional regulator” that are now covered by many other BSA obligations, including filing suspicious activity reports and currency transaction reports. “FinCEN anticipates that banks lacking a Federal functional regulator will be able to leverage existing policies, procedures, and internal controls required by other statutory and regulatory requirements to fulfill the proposed obligations,” the agency stated.

Written comments are due to FinCEN by Oct. 24.

FinCEN Notice of Proposed Rulemaking: BSA coverage