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Comp Blog

The Proposed Customer Due Diligence Requirements

By: Danielle Wright

CommentThursday - July 31, 2014

When the 88 page Customer Due Diligence proposal was issued this week, several people asked me to explain the proposed requirements to them “in a nutshell”.  Here goes….

Written procedures: Credit unions will be required to establish and maintain written procedures designed to identify and verify the beneficial owners of legal entity members, such as corporations, LLCs, partnerships, and similar businesses.

Identification: Credit unions will identify the beneficial owners by having the individual who is opening the account fill out a “Certification Regarding Beneficial Owners of Legal Entity Customers” form (included in the Appendix to the rule). This form will certify that the beneficial owner information provided on the form is correct.

Verification: Credit unions will verify the identity of the each of the beneficial owners listed on the certification form by, at a minimum, following the same procedures currently used for verification in their CIP programs;

Beneficial Owner:  A “beneficial owner” is defined as: 

(1) each individual, if any, who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, owns 25% or more of the equity interest of the legal entity member; and/or

(2) a single individual with significant responsibility to control, manage, or direct a legal entity member, including an executive officer or senior manager, such as the CEO, CFO, COO, Managing Member, General Partner, President, Vice President, or Treasurer; or any other individual who regularly performs similar functions.

Recordkeeping: Credit unions will be required to maintain a record that includes the certification form and any other identifying information, and retain the record for five years after the date the account is closed.

Beneficial Owner Certification Form:  The certification form will be completed by the person opening the account on behalf of the legal entity.  The information on the form includes:

  • The name, address, date of birth and SSN (or passport number or other similar information) for each beneficial owner;  
  • The name of the person opening the account;
  • The name of the legal entity; and
  • A signed certification by the person opening the account that the information provided on the form is complete and correct, to the best of their knowledge.   

Comments:  Don't forget to send your comments to CUNA's Dennis Tsang at


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