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.

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Published In: Administrative Agency Updates, Business Organization Updates, General Business Updates, Criminal Law Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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