The May 11, 2018 date for compliance is only a month away! Did you cross all the t’s and dot all the i’s? Here are three good questions from our Compliance Hotline. Check them out so you can confidently say you have addressed them in your own CDD Checklist for compliance.
1.) Should I run OFAC Checks on Beneficial Owners?
Yes, you should run OFAC on beneficial owners, that is why we are collecting this information in the first place. We want to be able to take appropriate action on the legal entity if there is a hit. The same goes for 314(a) scans: scan the beneficial owners for a named match, but you do not need to report the underlying beneficial owners if only the legal entity is a named subject match.
2.) Our sign vendor is offering an updated PATRIOT Act notice lobby sign to comply with the New CDD Rule. Is this a compliance requirement?
There does not appear to be a specific requirement to provide the PATRIOT Act notice lobby sign (Important Information About Procedures for Opening a New Account) in combination with compliance for CDD Rules. After reviewing FFIEC’s page CIP Overview, they are very specific about the signage the CIP notice for consumers but that doesn’t appear to be the case for entities (beneficial owners). To comply with CIP for beneficial owners, you need the same basic information you would be collecting for individuals: name, date of birth for individuals, address, and identification number.
If you do purchase a separate sign because your vendor is offering one, know that is not a compliance requirement. It would be voluntary to purchase a separate sign (FFIEC’s rules are clear that the original consumer notice cannot be combined with anything else). And it could be a time-saving deterrent for someone to read before opening an account if they do not have all the information required to certify beneficial owners.
3.) About collecting that same basic CIP, currently, we collect more than the basic CIP elements for accountholders/signers. Will we be criticized if we do not request the same extra information as beneficial owners?
CIP for beneficial owners does not have to look the same as your existing CIP for consumers. Be clear and specific to differentiate in your updated policies and procedures as to how you will perform CIP on beneficial owners. You may, as with consumer accounts, take a risk-based approach and collect more for CIP on beneficial owners than just the basics. The important part is to make sure you have a policy and procedure that is adhered to that distinctly addresses beneficial owner CIP.
Some helpful resources =
- FFIEC BSA Examination Manual: Here
- FinCEN’s Customer Due Diligence Requirements for Financial Institutions: Here