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Washington
BSA clarifications could strengthen member/customer due diligence
WASHINGTON (8/4/14)--A rule has been proposed to clarify and strengthen member/customer due diligence obligations of financial institutions in an effort to prevent anonymous companies from conducting illegal activity in the American financial sector. Proposed by the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN), the rule would amend  Bank Secrecy Act regulations.

The proposal was preceded by a related advance notice of proposed rulemaking from 2012. It woudl create a new, standardized format for covered financial institutions to collect information on beneficial owners, defined as individuals who own, control and profit from the companies they service. Financial institutions would be required to identify and verify any individual who owns 25% or more of a legal entity, and an individual who controls the legal entity.

The amendments clarify that customer (member) due diligence consists of:
  • Identifying and verifying the identity of members;

  • Identifying and verifying the beneficial owners of legal entity members;

  • Understanding the nature and purpose of member relationships; and

  • Conducting ongoing monitoring to maintain and update member information and identify and report suspicious transactions. 
David Cohen, Undersecretary for Terrorism and Financial Intelligence said the proposed rule would provide a new tool to track down people behind companies that "secretly move and launder their illicit gains."

CUNA continues to urge FinCEN and other regulators to minimize BSA regulatory burdens on credit unions.

Use the resource link below to access to the complete proposed rule.
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