By Diana Strade, Senior AssociateConsultant
RLR Management Consulting, Inc.

U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) issued its final rule on Customer Due Diligence (CDD) for financial institutions in May 2016. The new rule requires covered financial institutions to identify and verify the identity of the beneficial owners of all legal entity customers. It also adds CDD as a fifth pillar to the traditional four pillars of an effective anti-money laundering (AML) program. The final rule has an implementation date of May 11, 2018. Are you ready?

Here are five steps to ensure you are ready:

• Conduct a risk assessment review and make a determination of the Bank’s AML risk appetite:
  • Complex business relationships may require additional reporting and monitoring processes, which may impact staffing
• Perform an evaluation and update current Customer Identification Program (CIP) and ongoing monitoring policies (BSA; OFAC; CIP/New Account Opening) and procedures
• Ensure your core provider has made necessary revisions to the system for you to be able to input all beneficial owners
• Ensure your automated AML software is prepared for beneficial owners, aggregation of currency transaction reporting and additional monitoring for suspicious activity based on beneficial owners
• Read both of the FinCEN Frequently Asked Questions documents (Fin2016-G003 dated 7.16.16 and Fin2018-G001 dated 4.3.18)

Examiners are asking banks for their risk assessments prior to May 11^th to see if the bank has incorporated the new rule. For more information and help preparing for the implementation, contact me at diana.strade@rlrmgmt.com