On May 16, 2016, the firm published an alert titled “Treasury Announces Final Customer Due Diligence Rule and New Financial Transparency Legislation.”
On May 5, 2016, the U.S. Department of the Treasury released the final version of its customer due diligence rule imposing additional anti-money laundering diligence obligations on financial institutions pursuant to the Bank Secrecy Act. The Treasury Department also announced that it would propose legislation to establish beneficial ownership reporting requirements for U.S. companies and regulations to extend tax information reporting requirements to certain currently exempt foreign-owned U.S. “disregarded entities,” and, in a parallel announcement, the U.S. Department of Justice announced that it would propose legislation to enhance its AML and anticorruption enforcement powers. The Obama Administration described these as important measures to increase financial transparency by targeting key points of access to the international financial system.
The final customer due diligence rule requires covered financial institutions to identify and verify the identity of certain legal entity customers’ beneficial owners and formalizes regulatory expectations regarding the core elements of customer due diligence, including with respect to ongoing monitoring over the course of the customer relationship. The compliance deadline for implementation of the final customer due diligence rule is two years from the date of the rule’s issuance (May 11, 2018).