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FinCEN sets July 31 due diligence hearing
WASHINGTON (7/11/12)--The Financial Crimes Enforcement Network (FinCEN) has scheduled a July 31 public hearing to collect additional comments on customer due diligence (CDD) regulations it proposed earlier this year.

The hearing is scheduled for  9:30 a.m. to 5:30 p.m. ET  at the U.S. Treasury office. FinCEN has invited regulators, members of the law enforcement community, finance industry representatives and others to attend or submit comments. The hearing will be the first in a series of hearings on the potential due diligence regulations, FinCEN said.

Saying it was concerned by a lack of uniformity and consistency in how financial institutions address their CDD policies, FinCEN in March released an Advanced Notice of Proposed Rulemaking (ANPR). It proposed to codify, clarify, consolidate and strengthen CDD rules. The proposed rule would apply to financial institutions, securities brokers and dealers, mutual fund brokers and dealers, futures commission merchants, and some introducing commodities brokers, and would require them to establish and maintain policies for monitoring the accounts they hold.

A key part of the FinCEN ANPR addresses standards for verifying the identity of each member/customer and understanding the "nature and purpose" of each account held at an institution to assess the likelihood of suspicious activity. The proposed FinCEN regulations would be one part of a broader U.S. Treasury strategy to enhance financial transparency to strengthen efforts to combat financial crimes.

The Credit Union National Association (CUNA) in a comment letter said that while it supports the objective to improve the tracking of money laundering and terrorist financing, the increased regulatory burdens and costs the proposed rules would create for credit unions would far outweigh the purported benefits to FinCEN. CUNA noted it can be difficult for some credit unions to obtain certain account information from their members, and said the FinCEN rules could conflict or interfere with member confidentiality standards, resulting in potential fiduciary or legal issues.

FinCEN should abandon the due diligence ANPR and, instead, work with the National Credit Union Administration and other federal financial regulators to further clarify current Bank Secrecy Act and anti-money laundering rules, CUNA suggested.

For more on the FinCEN ANPR, and CUNA's comment letter, use the resource links.
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