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The Financial Crimes Enforcement Network's final rules on customer due diligence under the Bank Secrecy Act are scheduled to publish in the Federal Register Wednesday, and contain the applicability date for covered financial institutions of May 11, 2018.

The final rules would amend the agency's existing rules to include explicit customer due diligence requirements, including a requirement for those opening bank or credit union accounts for a "legal entity" to provide information on the beneficial owners of the account. FinCEN stated in the final rules that financial institutions may rely on the beneficial ownership information supplied by the customer and that the identification and verification procedures for beneficial owners are very similar to those for individual customers under a financial institution's customer identification program.

The rules state that financial institutions are required to maintain records of the beneficial ownership information they obtain and may rely on another financial institution for the performance of these requirements, provided certain conditions are met.

FinCEN's final rules also amend the anti-money laundering program rule to explicitly include risk-based procedures for conducting ongoing customer due diligence in order to understand the nature and purpose of customer relationships for the purpose of developing a customer risk profile. In addition, customer due diligence also includes identifying and reporting suspicious transactions and, on a risk basis, maintaining and updating customer information.

The annualized quantified costs for the rule under low-cost scenarios range from $148 million to $153 million and under high-cost scenarios are estimated to be $282 million to $287 million.

NAFCU voiced its opposition to the proposed version of this rule when it was released in 2014 because of the cost and burden it would impose on credit unions for minimal benefits. NAFCU will be issuing a full, in-depth Final Regulation on the rules soon.

For more on the due diligence rules, see today's post in the NAFCU Compliance Blog.