Davis Polk partner Dan Stipano discussed FinCEN’s Customer Due Diligence Rule and the timeline for revised beneficial ownership requirements with Thomson Reuters Regulatory Intelligence. The CDD Rule requires financial institutions to identify and verify the identity of customers and beneficial owners. FinCEN has yet to issue a final rule revising its CDD Rule to align it with the Corporate Transparency Act and Anti-Money Laundering Act.

Dan noted that for the time being, bank secrecy act officers “should continue to focus on compliance with the beneficial ownership requirements of the existing CDD Rule.”

“Those requirements will remain applicable until the revised CDD Rule has been finalized and is effective and that could take a long time; FinCEN has not even begun the rulemaking to make conforming changes to the Rule, and the proposed rule will surely generate a large number of comments from the industry that will have to be reviewed and analyzed,” Dan explained. “FinCEN has indicated that banks’ and other financial institutions’ access to the [BOI database] will ‘roughly coincide’ with the revisions of the existing CDD Rule, so such access is still a long ways off.”

In the meantime, Dan advised that financial institutions may “want to think about how they will obtain their customers’ consent to access the [data].”

“OUTLOOK 2024 - Beneficial ownership registers: U.S. database launches, UK Companies House overhaul begins,” Thomson Reuters Regulatory Intelligence (January 25, 2024) (subscription required) 

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