On May 16, 2016, as part of his remarks at the Institute of International Bankers Annual Anti-Money Laundering Seminar, US Financial Crimes Enforcement Network Deputy Director Jamal El-Hindi discussed certain US Department of Treasury efforts that have been rolled out in the last several months, including: (i) the final customer due diligence (CDD) rule; (ii) draft legislation requiring legal entities to provide beneficial ownership information at the company formation stage; and (iii) the use of FinCEN's geographic targeting orders.
The CDD final rule amends existing Bank Secrecy Act regulations to clarify and strengthen obligations of covered financial institutions, specifically banks, brokers or dealers in securities, mutual funds, futures commission merchants and introducing brokers in commodities. The final rule also adds a new requirement that these financial institutions know and verify the identities of the natural persons who own, control and profit from the legal entities the financial institutions service. Finally, the rule harmonizes BSA program rules and makes explicit several components of customer due diligence that have long been expected under existing regulations. El-Hindi noted how FinCEN relied on significant engagement with industry in finalizing this rule.
El-Hindi also highlighted the draft beneficial ownership legislation that FinCEN sent to Congress on May 5, 2016, requiring companies to know and report adequate and accurate beneficial ownership information at the time of a company's formation. The legislation would authorize the Treasury Department to require that legal entities formed or qualified to do business within the US file beneficial ownership information with FinCEN, or else face penalties for failure to comply. El-Hindi noted that a remaining challenge for FinCEN is to find support for the draft legislation in Congress, among the states and within industry.
Deputy Director El-Hindi's speech is available at: https://www.fincen.gov/news_room/speech/pdf/20160518.pdf.
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