August 24, 2014

FinCEN proposes BSA 'customer due diligence'

July 31, 2014 – A proposed rule issued Wednesday by Treasury's Financial Crimes Enforcement Network would revise Bank Secrecy Act rules to require someone opening a bank or credit union account for a "legal entity" to provide information on the beneficial owners of the account.

The proposal is one more step in efforts to uncover the identities of persons who launder and move illegal financial gains, Treasury said.

"The proposed requirement to identify and verify the identity of beneficial owners is addressed through the proposal of a new requirement for covered financial institutions to collect beneficial ownership in a standardized format," Treasury said in announcing the proposal. "Those financial institutions will have to identify and verify any individual who owns 25 percent of more of a legal entity, and an individual who controls the legal entity."

This "customer due diligence" proposal follows FinCEN's advance notice of proposed rulemaking from 2012. NAFCU wrote in 2012 that such a proposal would be costly for credit unions and unnecessary given current BSA/anti-money laundering program requirements.

NAFCU is reviewing the proposed rule. FinCEN will take comments for 60 days following publication in the Federal Register.