news.cuna.org/articles/110369-compliance-how-should-cus-prep-for-cdd-target-date

Compliance: How should CUs prep for CDD target date?

June 6, 2016

With a May 2018 compliance date for the Treasury’s new customer due diligence (CDD) rule, credit unions may be tempted to set it aside and focus on current compliance issues. But credit unions should use this time well, according to CUNA compliance staff, because it’s never too early to determine what changes need to be made to policies, procedures and software systems.

The Treasury’s Financial Crimes Enforcement Network (FinCEN) finalized this change to the Anti-Money Laundering/Bank Secrecy Act (AML/BSA) rules last month, which would clarify and strengthen CDD obligations of financial institutions, including credit unions.

When it comes to AML/BSA procedures, credit unions should look at updating:

  • Internal controls;
     
  • Independent testing procedures; and
     
  • Risk-assessment procedures;

According to CUNA’s compliance staff, credit unions should also begin to consider how they will:

  • Ensure their third-party processor is aware of the new information and monitoring requirements and will have the credit union’s system updated no later than May 11, 2018; 
     
  • Determine how the credit union will identify the beneficial owners of any legal entity accounts and talk to their processors to see whether the certification form provided in the regulation can be incorporated into an electronic records system;
     
  • Update account opening procedures to include the identification of the beneficial owners of business accounts and any other “legal entity” accounts;
     
  • Update Member Identification Program (MIP) procedures to include the methods that will be used to verify beneficial owners of legal entity accounts; and
     
  • Ensure that all appropriate personnel are trained on the new policies and procedures developed to meet the compliance requirements of this new rule.

In addition to CompBlog, CUNA’s Compliance Community contains discussion boards and a number of other resources for credit union compliance professionals around the country.