May 3, 2018

The Fifth Pillar – Beneficial Ownership – WST

Fifth Pillar – Last Call!

For the past two years, BSA compliance personnel have been working feverishly to prepare for the beneficial ownership requirements under the new Customer Due Diligence Rule (a/k/a The Fifth Pillar) that have a mandatory compliance date of May 11, 2018.  After months of system changes, policy and procedure revisions, and staff training, are you ready for the largest changes in the BSA environment in nearly 15 years?

Your carefully crafted program undoubtedly takes into consideration FinCEN’s July 2016 FAQ, and you’re probably making 11th hour adjustments based on the April 2018 FAQs.  (Isn’t it nice to finally know how to handle automatic certificate of deposit roll-overs?!?)  After all your preparation leading up to May 11th, how do you ensure your new program is “examiner ready”?  Two words: Quality Control

Classroom and online training are valuable, but giving your staff immediate feedback on those initial beneficial ownership determinations is on-the-job training that you just can’t beat.  A good quality control process ensures staff training is sufficient and can help identify program gaps before examiners show up.  Your QC process should begin when the very first new legal entity account subject to the CDD Rule is opened.  The person reviewing the documentation should be a resident “BSA expert” who is well-versed in your institution’s new CDD program requirements.  They should test a representative sample of new account documentation that includes all:

  • Banking offices;
  • Product types (e.g., transactional and non-transactional deposit accounts, safety deposit boxes, loans); and
  • Legal entity types (e.g., corporations, LLCs, partnerships, business trusts).

These QC findings can be used to identify additional staff training needs and tweak your program.  Even though your CDD program will likely evolve over time, these proactive steps start you off on the right foot and demonstrate your commitment to compliance.

April 2018 FAQ:

https://www.fincen.gov/sites/default/files/2018-04/FinCEN_Guidance_CDD_FAQ_FINAL_508_2.pdf

July 2016 FAQ:

https://www.ffiec.gov/bsa_aml_infobase/documents/FAQs_for_CDD_Final_Rule_(7_15_16).pdf

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Past Weekly Security Tips – WST

2018-05-03T18:27:28+00:00