On March 5, the Financial Crimes Enforcement Network, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Securities and Exchange Commission released guidance to clarify and consolidate existing regulatory expectations for obtaining beneficial ownership information for certain accounts and customer relationships (the Guidance).
According to the Guidance, “Heightened risks can arise with respect to beneficial owners of accounts because nominal account holders can enable individuals and business entities to conceal the identity of the true owner of assets or property derived from or associated with criminal activity.”
The Guidance notes that the customer due diligence (CDD) procedures used by a financial institution should be reasonably designed to identify and verify the identity of beneficial owners, as appropriate, based on the institution’s evaluation of risk pertaining to an account. The Guidance also describes certain CDD procedures that may be used by a financial institution to verify the beneficial owner of an account.
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