WASHINGTON—The U.S. Department of the Treasury’s Financial Crimes Enforcement Network on Friday issued an order providing regulatory relief to covered financial institutions by easing certain requirements under its 2016 Customer Due Diligence (CDD) Rule, eliminating the need to identify and verify beneficial owners each time an existing legal entity customer opens a new account.
Under the order, financial institutions will now be required to identify and verify beneficial ownership information only when a legal entity first opens an account, when new facts call into question the reliability of previously collected information, or when updates are required as part of the institution’s own risk-based customer due diligence procedures.
FinCEN Director Andrea Gacki said the move reflects the agency’s broader effort to modernize the Bank Secrecy Act framework while maintaining safeguards against illicit finance. The agency said the change is intended to support a more efficient, risk-based approach to compliance while reducing what it described as unnecessary regulatory burden on financial institutions.
The order does not alter broader anti-money laundering and countering the financing of terrorism obligations under the Bank Secrecy Act. Covered institutions must still conduct ongoing monitoring, report suspicious activity and, when appropriate based on risk, maintain and update customer information as part of their existing compliance programs, FinCEN stated.
For credit unions and other financial institutions, the change is expected to streamline account-opening processes for existing business members while preserving expectations around risk management and ongoing monitoring. The action signals a continued regulatory shift toward risk-based supervision rather than prescriptive, repeat verification requirements that industry groups have long argued added operational friction without commensurate AML benefits, analysts stated.