On March 5, 2010, the Financial Crimes Enforcement Network (FinCEN) issued guidance to clarify and consolidate existing regulatory expectations for obtaining beneficial ownership information for certain accounts and customer relationships.
The full text of the guidance is available at http://www.fincen.gov/statutes_regs/guidance/html/fin-2010-g001.html.
The guidance reiterates a firm’s obligation to have customer due diligence processes in place that enable it know its customers and the risks presented by its customers, as well as enable it to identify customers who pose heightened money laundering and terrorist financing risks. The guidance notes that accounts involving beneficial owners may pose heightened risks and identifies certain customer due diligence procedures that may be used in determining the risks associated with these types of accounts.
The guidance also notes that the firm should apply enhanced due diligence procedures to accounts that the firm identifies as posing heightened risks. These enhanced procedures may include steps to identify and verify beneficial owners, to reasonably understand the sources and uses of funds in the account and to reasonably understand the relationship between the customer and the beneficial owner. The information obtained from customer due diligence and enhanced due diligence procedures should be used in the monitoring process to identify discrepancies between information obtained regarding the account’s intended purpose and the expected account activity and the actual sources of funds and uses of the account.
FCM and IB Members should review the full text of FinCEN’s guidance and ensure that their AML Compliance Programs are updated to incorporate this guidance.