Customer Due Diligence
FinCEN Rule Requires Expanded Customer Due Diligence
May 2018
Effective May 11, 2018, the Customer Due Diligence Rule ("CDD Rule") issued by the U.S. Department of the Treasury Financial Crimes Enforcement Network ("FinCEN") will require covered financial institutions to identify and verify the identity of beneficial owners of legal entity customers, subject to certain exclusions and exemptions.
The information that must be obtained from certain individual equity owners and controlling persons includes the following:
- Name;
- Street address;
- Date of birth; and
- Taxpayer identification number (e.g., Social Security or other government-issued identification number)
In order to verify the identity of such individuals, covered financial institutions may request copies of identification documents (e.g., copy of a driver’s license or passport).
As applied by BNY Mellon, a beneficial owner includes the following:
- Any individual who owns 10/25 percent or more of the equity interests of the legal entity customer depending on certain criteria (e.g., customer’s location); and
- A single individual with significant responsibility to control, manage, or direct the legal entity customer (e.g., CEO, CFO, COO) as determined by the customer
The CDD Rule requires authorized representatives of legal entity customers to provide a beneficial ownership certification each time they open a new account at a covered financial institution.
Covered financial institutions will not have to collect beneficial owner information on most U.S. financial institutions, U.S. publicly traded entities, and government entities.
BNY Mellon will implement the CDD Rule requirements globally by the May 11, 2018 effective date. Please visit FinCEN’s frequently asked questions page for more information about the CDD Rule.