WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) has made permanent its limited exemption to covered financial institutions from obligations under its customer due diligence (CDD) rule.
The now-permanent exemption pertains to the rule's beneficial ownership requirements for certain products that automatically rollover and renew.
More specifically, according to NAFCU Senior Regulatory Compliance Counsel Stephanie Lyon, the relief only applies to "rollover, renewal, modification or extension of these accounts and not to initial account opening. This means if any of these account types were opened before May 11, 2018, credit unions will not have to collect beneficial ownership information during subsequent rollovers, renewals or certain modifications."
Lyon noted that with each type of exempted account, FinCEN reserves the right to revoke this limited relief at any time.
The CDD rule requires credit unions to identify and verify the beneficial owner(s) of legal entity accounts, subject to certain exceptions. Previously, a credit union was only required to know the identity of each of its legal entity customers but not necessarily its beneficial, natural person owners.
Beneficial owners include each natural person who directly or indirectly has a 25% or more equity interest in the legal entity customer, as well as individuals that have "significant responsibility to control, manage or direct a legal entity customer," such as a CEO, COO or CFO, Lyon explained.