United States

FinCEN issues FAQs on customer due diligence rule


The Financial Crimes Enforcement Network (FinCEN) has issued FAQs to provide additional guidance on the customer due diligence rule.

In May 2016, the customer due diligence rule was finalized with the intent to enhance the customer due diligence requirements of the Bank Secrecy Act (BSA) by requiring the identification of beneficial owners of legal entity customers to better understand the customer relationships and require ongoing monitoring on these customer relationships. During the last two years, the industry has raised many questions and concerns about the final rule in hopes to gain a better understanding of the requirements of the rule prior to implementing the required procedures. On April 3, 2018, the highly anticipated FAQs were published by FinCEN to provide additional guidance on the requirements of the new customer due diligence rule as well as to assist with the implementation of the new rule. The published FAQs address many of the questions raised within the industry since the proposal of the final rule, including, but not limited to, questions related to the coverage of the new rule, identification and verification requirements and methodology, use of the certification form, customer relationship monitoring and profiles, and the impact on currency transaction reporting.

Beginning on May 11, 2018, covered financial institutions must comply with the new rule. In doing so, financial institutions must implement the required procedures related to the new customer due diligence rule as part of the institution’s BSA program. Due to the fast-approaching mandatory compliance date, financial institutions should take the opportunity to review the FAQs as they begin the implementation process, if not already started, to make certain the institutions’ procedures are developed and implemented in alignment with the intent of the rule.