The US Department of the Treasury Financial Crimes Enforcement Network (FinCen) announced on May 11, 2016, that it is issuing final rules under the Bank Secrecy Act to "clarify and strengthen customer due diligence (CDD) requirements for: Banks; brokers or dealers in securities; mutual funds; and futures commission merchants and introducing brokers in commodities." The final rules, which have been four years in the making, will be effective July 11, 2016. Covered financial institutions must come into compliance by May 11, 2018.
The rule imposes new obligations on financial institutions to verify the beneficial owners of their "legal entity customers," such as corporations and general partnerships, with few exclusions. The CDD requirement involves first identifying the individuals who own 25 percent or more of the legal entity, then identifying the one or more individuals who exert control over the entity. Institutions must collect personally identifying information about these individuals, document it, and maintain it.
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