The Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a new set of frequently asked questions for its Customer Due Diligence (CDD) rule, which goes into effect May 11. These FAQs are in addition to the set FinCEN published in July 2016, and the agency says it may issue “additional FAQs, guidance or grant exceptive relief as appropriate.”
The document contains 37 sets of questions and answers. CUNA’s compliance staff notes in a CompBlog entry that question 12 is particularly interesting for credit unions.
It addresses whether renewable share certificates/CDs constitute new accounts under the rule:
Q: Are financial institutions required to have their legal entity customers certify the beneficial owners for existing customers during the course of a financial product renewal (e.g., a loan renewal or certificate of deposit)?
A: Yes. Consistent with the definition of “account” in the CIP rules and subsequent interagency guidance, each time a loan is renewed or a certificate of deposit is rolled over, the bank establishes another formal banking relationship and a new account is established. Covered financial institutions are required to obtain information on the beneficial owners of a legal entity that opens a new account, meaning (in the case of a bank) for each new formal banking relationship established, even if the legal entity is an existing customer…
Additional information on the answer can be found on pages nine and 10 of the FAQs.