FinCEN issued a Notice of Proposed Rulemaking (NPR) in August that would impose explicit customer due diligence requirements, including a new regulatory obligation requiring banks and other covered financial institutions to identify beneficial owners of legal entity customers (such as corporations), subject to certain exemptions. The NPR also addressed the requirements of financial institutions to understand the “nature and purpose” of their customers accounts. Many believe that the NPR, if passed unchanged, will impose signficant new burdens, despite FinCEN’s assertions that only a few additonal obligations have been imposed. The comment period ended October 3rd.
Under the NPR, banks that issue payment cards will need to deal with some thorny issues regarding who is the banks customer, especially in the context of business-to-business payment card sales.