'Know-your-member' rules are clarified

VIENNA, Va. (3/8/10)—The Financial Crimes Enforcement Network (FinCEN) said it worked closely with federal regulators to hammer out new guidance for financial institutions regarding the beneficial ownership of accounts.

On Friday, FinCEN released "Guidance on Obtaining and Retaining Beneficial Ownership Information," which not only clears up some confusion associated with the rules, it also consolidates regulatory expectations.

The guidance reiterates that credit unions and all financial institutions are obliged to know if a member or customer presents a risk under the Bank Secrecy Act (BSA), which calls upon financial institutions to help fight such crimes as money laundering, terror financing, tax evasion, and sanctions evasion. If an accountholder appears to be a heightened risk, an institution should conduct enhanced due diligence.

According to a report by the Government Accountability Office (GAO), law enforcement officials are concerned that criminals are increasingly using United States shell companies to conceal their identity and their illicit activities, FinCEN notes.

"Information on beneficial ownership in account relationships provides another tool for financial institutions to better understand and address money laundering and terrorist financing risks, protect themselves from criminal activity, and assist law enforcement with investigations and prosecutions.

FinCEN Director James Freis, Jr. said of the new guidance, "While much of the document consolidates previously issued regulatory guidance, by synthesizing the disparate obligations, FinCEN is highlighting how the rules can be mutually reinforcing in mitigating risks."

Use the resource link below to access the guidance.

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Resource Links
FinCEN-Regulators’ Guidance
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