FinCEN Customer Due Diligence Rule Now in Effect
Since May 11, 2018, covered financial institutions must comply with the FinCEN Customer Due Diligence Rule. Promulgated by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network, the Rule requires that banks and other financial institutions establish and maintain due diligence procedures to identify and verify the beneficial owners of legal entity customers as they open new accounts on or after May 11, 2018. The purpose of the rule is to help prevent money laundering and other illegal activities.
Under the Rule, “covered financial institutions” are banks, brokers or dealers in securities, mutual funds and futures commission merchants and introducing brokers in commodities. A “legal entity customer” is a corporation, limited liability company, general partnership or other legally recognized entity. The Rule further defines a “beneficial owner” as an individual who directly or indirectly owns 25% or more of a legal entity customer, or an individual with significant responsibility to control, manage or direct a legal entity customer.
Compliance with the Rule requires that the covered financial institution verify the beneficial owners, obtain certain information on them and retain that information for a period of five years after the account is closed. In addition, the institution must maintain certain information relative to the documents used to identify the beneficial owners for a period of five years from the date the record was created. To assist in compliance, the Rule includes a model certification form which may be used.
To learn more about the FinCEN Customer Due Diligence Rule, please contact Doug Waldorf at email@example.com or call him at 239-514-1000.
Doug Waldorf is a shareholder of Grant Fridkin Pearson, P.A. and has practiced law in Southwest Florida since 1987, including more than a decade as in-house counsel for SunTrust Bank. He is board certified in real estate by The Florida Bar since 2002. Mr. Waldorf represents institutional and private equity lenders and also practices in the areas of real estate purchase and sale transactions, leasing and related landlord/tenant matters and title claims work. He regularly serves as a lecturer for the Miami-based Center for Financial Training and for national webinar host, Total Training Solutions presenting banking-related seminars and webinars on loan documentation, loan defaults and collection, real estate law and mortgage foreclosure. He has served as Adjunct Professor at Florida SouthWestern State College in Fort Myers, Florida, teaching courses in real estate law and legal research and writing.