The Federal Financial Institutions Examination Council (FFIEC) issued last week new examination procedures on the final rule by the Financial Crimes Enforcement Network (FinCEN) on “Customer Due Diligence Requirements for Financial Institutions.”
The new examination procedures replace those in the FFIEC’s Bank Secrecy Act/Anti-Money Laundering Examination Manual. These new examination procedures apply to banks, savings and loan associations, savings associations, credit unions, and branches, agencies, and representative offices of foreign banks.
Further, new overview and examination procedures were developed for the beneficial ownership requirements for legal entity customers.
The final clarifies customer due diligence requirements.
In accordance with regulatory requirements, all banks must develop and implement appropriate risk-based procedures for conducting ongoing customer due diligence, including, but not limited to, obtaining and analyzing customer information to understand customer relationships for the purpose of developing a customer risk profile; and ongoing monitoring to identify and report suspicious transactions.
In addition, it includes a new requirement for covered financial institutions to identify and verify the identity of beneficial owners of certain legal entity customers. Banks and other financial institutions were required to start complying with this rule on May 11, 2018.
The new procedures were created by FFIEC member agencies in collaboration with FinCEN and the U.S. Department of the Treasury.