Cadwalader attorneys reviewed the Financial Crimes Enforcement Network's ("FinCEN") final version of "Customer Due Diligence Rules." The final rules impose a new requirement for covered financial institutions to identify the beneficial owners who own or control certain legal entity customers at the time a new account is opened. The financial institutions affected by this requirement include banks, broker-dealers, mutual funds, futures commission merchants and introducing brokers in commodities.
The final rules amend the anti-money laundering program requirements to include risk-based procedures for conducting ongoing customer due diligence. The attorneys noted that while these rules have been under development for years, their timely release by FinCEN this week coincides with the recent disclosure of the "Panama Papers" and multi-pronged efforts by the Obama Administration to combat money laundering, terrorist financing and tax evasion. Financial institutions subject to the new Customer Due Diligence Rules will be required to update their anti-money laundering compliance programs accordingly no later than May 11, 2018.
Cadwalader attorneys also outlined: (i) customer due diligence for new accounts, including beneficial ownership identification and verification, recordkeeping requirements, and limitations and exemptions; (ii) ongoing due diligence requirements for existing accounts; and (iii) the beginning of a new due diligence regime.
Click here to view the Cadwalader memorandum authored by Joseph Moreno, Jodi Avergun, Dorothy Mehta, Scott Cammarn, and Colleen Kukowski.
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