FinCEN to raise regulatory bar on due diligence

by Off the Cuff

Coming compliance change would add new heft to “know your customer” rules for business, organizational accounts.

by: Marc Rapport

Thinking about 2015 yet? It’ll be here soon, along with new mortgage regs from the CFPB, perhaps risk-based capital changes from the NCUA, and now new “know your customer” requirements courtesy of the Financial Crimes Enforcement Network and the Bank Secrecy Act.

The underlying idea is to help spot money laundering and other illegal activity. But that’s not how everyone sees it.

“This is just another major expense on the compliance front for credit unions,” says Virginia-based industry attorney Andy Keeney of the proposed Customer Due Diligence Requirements for Financial Institutions that were published Aug. 4 in the Federal Register. Read it here on page 45152.

The proposal leads off with: “The proposed rules would contain explicit customer due diligence requirements and would include a new regulatory requirement to identify beneficial owners of legal entity customers, subject to certain exemptions.”

The FinCEN board includes NCUA representation, and credit unions are not exempt from its requirements. The comment period ends Oct. 3 and the impact could be considerable, Keeney says.

continue reading »