The Financial Crimes Enforcement Network recently issued a notice of proposed rule making that clarifies and strengthens existing customer due diligence requirements under the Bank Secrecy Act and establishes a definition for determining beneficial ownership through a two-prong test.
Under the proposed amendments to the BSA, financial institutions would be required to use a two-prong test to identify and verify the identities of the individuals, known as beneficial owners who own, control and profit from the companies that they service. This notice would provide more consistency in how financial institutions and regulators apply existing due diligence rules and would enhance financial transparency. The proposed rules apply to banks and other financial institutions, including broker-dealers, mutual funds, futures commission merchants and introducing brokers.
