The May 11 effective date of the new Customer Due Diligence (CDD) rule is approaching, after which credit unions will be required to obtain identifying information about the beneficial owners of their legal entity accounts.
A recent CUNA CompBlog post details some of the rule’s exceptions and exemptions.
The rule defines beneficial owners as:
A credit union may be exempt from the requirements to identify and verify the beneficial owner(s) of a legal entity member only to the extent the credit union opens an account that is:
These four exemptions do not apply to transaction accounts through which a legal entity member can make payments to, or receive payments from, third parties.
Additionally, if there is the possibility of a cash refund on the account activity identified in one of these four exemptions then beneficial ownership of the legal entity member must be identified and verified by the credit union as required by the new rule, either at the time of initial remittance, or at the time such refund occurs.
The Treasury’s Financial Crimes Enforcement Network (FinCEN) has provided some exceptions to the rule, legal entities that are considered very unlikely to foster money laundering. The full list of 19 entities can be found on CUNA’s CompBlog.