Compliance Deadline Reminder: Beneficial Ownership is Just Two Days Away!
in Compliance & Regulatory
By: Nicola Foggie, NJCUL Vice President, Compliance and Regulatory Affairs

Credit unions had two years to get ready for the May 11, 2018 effective date for the Customer (Member) Due Diligence rule (CDD) that adds requirements for certain financial institutions, including credit unions, to identify and verify beneficial owners of legal entity customers (Beneficial Owners) in furtherance of the Bank Secrecy Act (BSA). The U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) published the final rule May 11, 2016.

By complying with these AML requirements, covered institutions may also reduce their risks under other federal laws such as the sanctions regulations implemented by the Treasury Department’s Office of Foreign Assets Control (OFAC).

There are several questions about the who” for the CDD Rule: who is covered; who is a legal entity customer; and who is a beneficial owner of a legal entity customer?

Who is covered by this rule?

Although the BSA and implementing regulations cover a broad variety of financial institutions, only a subset of these are within the scope of the CDD Rule. For this rule, the financial institutions covered include:

  • federally-regulated banks;
  • federally-insured credit unions;
  • mutual funds;
  • securities broker-dealers;
  • futures commission merchants; and
  • introducing brokers in commodities.

The other question is “Who is a legal entity customer?” The CDD Rule defines a “legal entity customer” as one of the following:

  • a corporation;
  • a limited liability company;
  • another entity created by a public filing with a Secretary of State or its equivalent;
  • a general partnership;
  • a limited partnership;
  • a business trust created by filing with a state office; and
  • any similar entity formed under foreign law.

Not ready? It’s not too late to comply! Want to know more? Register for NJCUL’s FREE Compliance Webinar “Beneficial Ownership is Here! – CDD”, taking place tomorrow, Thursday, May 10 at 10:00 am – 11:00 am ET.

Questions? Contact: NJCUL’s Vice President of Compliance & Regulatory Affairs, Nicola Foggie, at nfoggie@njcul.org.