Customer Due Diligence and Beneficial Ownership: Updates to FFIEC Examination Manual and FinCEN Administrative Ruling

05/16/2018
Client Alert

May 11, 2018 was the applicability date for FinCEN’s new “Customer Due Diligence Requirements for Financial Institutions” (the “CDD Rule”). FinCEN noted the occasion by issuing a press release to remind covered financial institutions that the CDD Rule “clarifies and strengthens customer due diligence requirements” and “adds a new requirement … to identify and verify the identity” of beneficial owners. The agency also issued an administrative ruling (“Ruling”) to provide exceptive relief to covered financial institutions with respect to the application of beneficial ownership requirements to premium finance lending products that allow for cash refunds.

On the same day, the FFIEC released two sections of its Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual (“FFIEC Manual”): (i) “Customer Due Diligence - Overview and Examination Procedures” (“CDD Section”) and (ii) “Beneficial Ownership Requirements for Legal Entity Customers - Overview and Examination Procedures” (“Beneficial Ownership Section”). Whereas the Beneficial Ownership Section is new, the CDD Section is an update to the FFIEC Manual.

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