Critical CDD Changes for Beneficial Ownership Rules – Are You Prepared for May 11, 2018?
The new CDD rules are often called the “Fifth Pillar” of an AML (Anti Money Laundering) program. These new rules are the most significant change to the BSA regulations since the USA Patriot Act.
FinCEN has issued substantial new AML requirements focused on a major expansion of Know Your Customer into what is now Customer Due Diligence, CDD. It creates a “two-prong” approach for covered Legal Entity accounts opened on or after May 11, 2018 to identify Beneficial Owners and its Controlling Person(s). Financial institutions will be required to establish and maintain written procedures that incorporate the identification of beneficial owners of legal entity customers into their AML compliance program. What caught many by surprise is that the new rule also strengthens CDD requirements and officially incorporates CDD into a new fifth pillar for BSA/AML. Here are some highlights of the webinar that are designed to help you prepare for the upcoming changes.
New policy requirements that must be identified and revised
Four core elements of the CDD rules that must be included in the implementation design
Customer identification and verification
Beneficial ownership identification and verification of a "legal entity"
Understanding the nature and purpose of the relationship to develop a customer risk profile
Ongoing monitoring for suspicious transactions and maintaining and updating customer information
The preparation plan should include review of:
New account opening procedures
Suspicious activity monitoring procedures
CTR aggregation procedures
Onboarding processes, including eight important questions to update procedures
Training tips for the final rule, including customer education and potential form revisions for signature cards, certification forms, and worksheets.
Available guidance from FinCEN (as of the March 30, 2018)
CDD checklists under the new rules
Template to develop a risk profile
Sample CDD policy
Template for identifying and verifying beneficial owners
The program is designed for any employee who opens new accounts, including loans and/or deposit accounts for “legal entities”. The employees who will benefit from the program include new account staff, lenders and loan support staff, branch administration, deposit and loan operation staff, BSA Officers and staff, and trainers for the loan and deposit areas.
Susan Costonis is a compliance consultant and trainer. She began her banking career in 1978 and specializes in compliance management along with deposit and lending regulatory training.
Susan has successfully managed compliance programs and exams for institutions that ranged from a community bank to large multi-state bank holding companies. She has been a compliance officer for institutions supervised by the OCC, FDIC, and Federal Reserve. Susan has been a Certified Regulatory Compliance Manager since 1998, completed the ABA Graduate Compliance School, and graduated from the University of Akron and the Graduate Banking School of the University of Colorado. She regularly presents to financial institution audiences in several states.