WASHINGTON—Acknowledging implementation concerns related to the Financial Crimes Enforcement Network's (FinCEN) customer due diligence (CDD) and beneficial ownership provisions, NCUA Chairman J. Mark McWatters said "NCUA examiners have been instructed to accept a credit union’s reasonable and good faith efforts to comply with the new rule throughout 2018."
McWatters' comments were published in a Letter to Credit Unions that coincided with the NCUA's issuance of examination procedures to field staff for Bank Secrecy Act/Anti-Money Laundering (BSA/AML) rules.
However, McWatters stressed that the NCUA's acceptance of "good faith efforts" would not protect credit unions from possible FinCEN penalties.
FinCEN has twice extended a limited exemption for the CDD rule; the exemption for covered financial institutions is now set to expire Sept. 8, but FinCEN stated this exemption "may be extended, modified or revoked." The exemption pertains to the rule's beneficial ownership requirements for certain products that automatically rollover and renew, NAFCU noted.
Another Change
One of the CDD rule's requirements is 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 members, 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.