NCUA to accept ‘good faith efforts’ for CDD compliance

Acknowledging implementation concerns related to the Financial Crimes Enforcement Network’s (FinCEN) customer due diligence (CDD) and beneficial ownership provisions, NCUA Chairman J. Mark McWatters said “NCUA examiners have been instructed to accept a credit union’s reasonable and good faith efforts to comply with the new rule throughout 2018.”

McWatters’ comments were published in a Letter to Credit Unions Monday that coincided with the NCUA’s issuance of examination procedures to field staff for Bank Secrecy Act/Anti-Money Laundering (BSA/AML) rules. However, McWatters stressed that the NCUA’s acceptance of “good faith efforts” would not protect credit unions from possible FinCEN penalties.

FinCEN has twice extended a limited exemption for the CDD rule; the exemption for covered financial institutions is now set to expire Sept. 8, but FinCEN stated this exemption “may be extended, modified or revoked.” The exemption pertains to the rule’s beneficial ownership requirements for certain products that automatically rollover and renew.

One of the CDD rule’s requirements is to identify and verify the beneficial owner(s) of legal entity accounts, subject to certain exceptions. Previously, a credit union was only required to know the identity of each of its legal entity customers but not necessarily its beneficial, natural person owners.

 

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