On February 29, 2012, FinCEN released an advance notice of proposed rulemaking on customer due diligence and beneficial owners, proposing to make a customer due diligence obligation explicit for ALL customers (to “clarify, consolidate and harmonize” the federal banking agencies’ expectations) and extending the requirement to collect (and possibly verify) beneficial owner information for most or all customers as well.
FinCen’s advance notice of proposed rulemaking (ANPRM), seeks public comment on a range of questions regarding the development of a customer due diligence (CDD) regulation that would “(i) codify, clarify, consolidate, and strengthen existing CDD regulatory requirements and supervisory expectations, and (ii) establish a categorical requirement for financial institutions to identify beneficial ownership of their accountholders, subject to risk-based verification and pursuant to an alternative definition of beneficial ownership.” Comments received in response to the ANPRM will likely be influential in FinCEN’s development of a more formal and detailed proposed rule on the topic.
FinCEN is initially considering a CDD rule to cover banks, broker dealers, mutual funds, futures commission merchants, and introducing brokers in commodities, and thus the ANPRM is focused on those institutions. The scope of the ANPRM, however, includes all industries subject to FinCEN’s anti-money laundering (AML) program requirements. FinCEN believes that a CDD rule may be appropriate for all financial institutions under its purview and will consider extending a CDD rule to other types of institutions in the future. Thus, FinCEN is specifically requesting comments from all other financial institutions covered by FinCEN regulations as well, including providers of prepaid access and other types of money services businesses (MSBs), insurance companies, casinos, non-bank mortgage lenders and originators, and dealers in precious metals, stones and jewels.
FinCEN has announced a new outreach effort targeted at depository institutions under $5 billion in total assets to determine how these institutions comply with the Bank Secrecy Act and the specific compliance hurdles they confront. If your institution has assets under $5 billion, please see our client alert about FinCEN’s outreach proposal.
As part of its ongoing outreach efforts, FinCEN is now seeking to engage smaller to moderate size depository institutions who are working to implement the four pillars of the Bank Secrecy Act regulatory regime: (1) policies, procedures and internal controls; (2) designation of a compliance officer; (3) ongoing training; and (4) independent testing.