AMLSanctions

FinCEN’s Final Rule on CDD comes into force

By May 11, 2018 No Comments

FinCEN’s Final Rule comes into force

Today marks the implementation date of FinCEN’s final rule on Customer Due Diligence (CDD). Announced two years ago, the rule creates a four-step regime for what FinCEN will view as sufficient CDD on the opening of all new accounts from this date. The steps include:

  1. Customer identification

  2. Identification of beneficial ownership

  3. Identifying the nature and purpose of a relationship

  4. Ongoing monitoring of entities

It is the second requirement, to understand beneficial ownership, that has caused quite the commotion for businesses across the US. Verifying who your beneficial owners are has never before been a regulatory requirement and the rule is multifaceted. Firstly, businesses will have to identify anyone who directly or indirectly owns 25% or more of an entity. Secondly, firms will also have to identify a single individual who has significant control over the entity in question such as a CEO or a CFO. Firms have found preparing for the requirement a considerable logistical burden as they try to figure out how to collect this information and what classes as a “new” account. Once complied with however, this new requirement could go far in improving financial transparency in the US.

The end of the JCPoA – what will come from it?

This week President Trump pulled out of the Joint Comprehensive Plan of Action (JCPoA), also known as the Iran Nuclear Deal. In a 12 minute address he swiftly brushed away the historic deal, reinstating rigid sanctions, and damaged alliances with European partners in the process. Companies will have until November 4th to align their compliance practises with the rejuvenated sanctions or face penalties. The repercussions of the decision are likely to be considerable.

EU leaders have committed to maintaining the JCPoA which, if plausible, will likely create a regulatory mindfield for international companies. European companies who invested in Iran face a period of painful uncertainty as their national leaders attempt to lobby the US for exemptions to secondary sanctions, which if not achieved will cost them billions in lost deals. Tensions in the Middle East will also be tested as Iran reasserts itself, Thursday’s firing on the Golan Heights has been an early example of this. Lastly, Trump’s action over Iran show once again his willingness to pull out of international agreements of global importance. A fact that seems at odds with his intentions to  “try” for a special moment of world peace with Kim Jong Un.

Date & Place set. The world prepares for a historic summit

US Secretary of State, Mike Pompeo was in North Korea this week finalizing preparations for the forthcoming summit between Donald Trump and Kim Jong-un. According to a tweet by Trump, the date and the location of the meeting have been set for June 12th in Singapore.  Little is known about the exact agenda but US sanctions on North Korea are assumed to be high up on the list of priorities to discuss.

Drastic change however, is not expected. It is unlikely that the sanctions placed on North Korea, which have been significantly ramped up since September 2016, will be repealed anytime soon. Trump has said on multiple occasions that it will not be until the Kim regime has definitively proved that they have put their nuclear weapons program to bed that any discussions on sanctions can take place. It is clear that when it comes to nuclear weapons, for Trump sanctions are not negotiable.

Get the latest regulatory
and compliance news

Sign up now

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close