On May 11, 2018, the US Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) implemented its Final Rule on Customer Due Diligence Requirements for Financial Institutions (“Rule”) to amend the scope of customer due diligence (“CDD”) obligations required by the Bank Secrecy Act ("BSA”).

As we discussed in a prior client alert, this Rule aims to accomplish two objectives by increasing the CDD obligations of covered financial institutions (“CFIs”), including banks, mutual funds, securities broker-dealers, and futures commission merchants. First, it requires CFIs to collect and verify information about the natural persons (“beneficial owners”) who own or control the CFIs’ “legal entity customers” (e.g., corporations, limited liability companies, general partnerships). Second, it establishes a fifth pillar of anti-money laundering (“AML”) programs by requiring CFIs to develop customer risk profiles and conduct ongoing monitoring to identify suspicious activity and update relevant customer information.