FinCEN’s Final Rule for financial institutions on due diligence imminent

The US Treasury Department’s Financial Crimes Enforcement Network’s (FinCEN’s) Final Rule regarding customer due diligence will soon be in force, and financial institutions are making plans to ensure that compliant programmes are in place.

Implementation is required by 11 May 2018 and programmes should be in line with FinCEN’s guidance on the core elements of customer due diligence.

Core elements

The core elements include customer identification and validation as well as beneficial ownership identification and verification.

Financial institutions will need to understand the nature and purpose of customer relationships to develop customer risk profiles.

FinCEN will also require ongoing monitoring for and reporting of suspicious transactions as well as systems for maintaining and updating customer information.

Data integrity and ownership

The process of customer identification and validation is expected to involve the vetting of new and existing customers and vendors to ensure data integrity and consistency for regulatory reporting.

In terms of beneficial ownership, financial institutions should authenticate and validate business relationships to ensure that all individuals are identified who maintain a 25 per cent or greater equity interest or possess the ability to control any business partner.

Monitoring and record keeping

Financial institutions may need to evaluate technology solutions to facilitate monitoring and record keeping that is sufficiently robust to meet FinCEN’s standards.

Monitoring and record keeping programmes should provide the basis for reporting suspicious transactions and maintaining and updating customer information.

Categories: Trade Based Financial crimes News

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