Customer Due Diligence and Beneficial Ownership: New Requirements for Financial Institutions?


Coming soon to a financial institution near you: the requirement that all financial institutions identify individuals who own, control or benefit from a legal arrangement (corporations, etc.) and verify their identities before opening an account, dealing in securities, selling a used car or originating a mortgage.

This will be a burdensome, time-consuming and expensive requirement, no matter the final definition of “beneficial owner,” or the types of “legal arrangements” to which it applies. Given that approval of this obligation is being orchestrated outside of the normal bank regulatory channels, unless financial institutions ("FI"s) act in concert, adoption of this rule is a matter of when, not whether, in order to satisfy law enforcement and international regulatory pressure.

Please see full alert below for more information.

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