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#2077412 - 05/06/16 03:38 PM CDD Rule Final - implementation 05/11/18
WonderWoman Offline
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gone fishin'
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#2077422 - 05/06/16 04:08 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
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cost to comply seems like an extreme understatement
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#2077427 - 05/06/16 04:30 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
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BOL is going to read through the 227 pages & give us all a recap right?
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#2077431 - 05/06/16 04:42 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
edAudit Offline
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I can sum it up while it is effective now we will not get hammered until 2018 plenty of time to find a new industry to work in.
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#2077522 - 05/06/16 08:02 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
Pat Patriot Act Offline
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Originally Posted By WonderWoman
BOL is going to read through the 227 pages & give us all a recap right?


I already read front-to-back. Here's my recap:

We're all screwed.

Have a great weekend!
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#2077528 - 05/06/16 08:09 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
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I am so laughing at your comment Pat Patriot Act because it is so true. I am falling asleep trying to read thru it and wondering how our vendors are going to make this work with our systems and there will also have to be training for the front line employees. At least we have two years to figure it out.
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#2077551 - 05/06/16 10:32 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
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Top of page 6 - it appears to include all existing customers.

That's enough reading for today.
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#2077554 - 05/07/16 12:51 AM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
thomasj Offline
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Just skimmed through a dozen or so pages before leaving for the day. The statements about possibly aggregating cash transactions for CTR reporting based on beneficial ownership were somewhat troubling. I cringe when I think about how this will be interpreted by examiners. In the scenario spelled out, I would agree with possibly a SAR, but a CTR? Hopefully my eyes were blurry and my mind fried from a long week and this will not seem as daunting when I look at it again.
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#2077566 - 05/07/16 06:41 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
Elwood P. Dowd Offline
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Just a suggestion, if you intend to read and analyze the regulation, save the document linked above to your hard drive. If you have the software, mark it up with highlights, questions, and comments as you go through. You are unlikely to finish it in a single sitting. However, if you save and mark up a copy you are more likely to go back and finish your review later. The document is like a big text book that many will find too burdensome to finish if they just start plowing through from the beginning. I suggest you skip the sections where there may be a couple of nuggets, but no veins of useful information.

Much of the “preamble” epitomizes the saying “History is written by the victors.” To summarize: “We did a good job and some commenters thought we were wrong, but we weren’t.”

The first 25 pages include only one point not found later. (The first bullet point below.) Save those pages for last if you still have some eyesight left. Part IV, the regulatory analysis, is a detailed discourse on what is now a moot point, their nakedly academic financial analysis of the regulation’s impact. Skip that altogether.

Start by reading the regulation regarding banks and Appendix A. It begins on page 205. Then, read the new “program” regulation which is being inserted into the BSA regulation. It begins on page 220. Take your time and figure out what you believe that language would require you to do.

Next, read part III, the Section by Section Analysis. For banks, it begins on page 26 and goes through page 96. Compare it to your understanding of the regulation you just read.

If you got through those two segments, you’ve got the gist of it and can go back to the first 25 pages if you like. All total, you will read less than half of the document. Consider anything more you read as the gravy on your taters, but it’s going to be watery at best.

The scary parts:

* The discussion of “regulatory deference” on pages 24 & 25 where they indicate that the regulation sets minimum standards which regulators are free to enhance. (They are either delegating their authority to administer the Bank Secrecy Act or simply acknowledging that the regulators have already taken it.)
* Interestingly, most of the technical comments they reference are solely attributable to the ABA's comment letter, but they do not acknowledge that source. (It was the ABA, not individual banks, that made a real contribution to this process.)
* There are repeated references in the section by section analysis to the fact that banks could/should do more; e.g. use a lower percentage of ownership to identify beneficial owners, etc. on higher risk customers. ("Extra credit" efforts mentioned in the preamble will have greater credibility when suggested by reviewers who see their role as making suggestions even when a compliance program is working well.)
* The example on aggregation based on beneficial ownership that would have been subject to aggregation anyway.
* The creation of the fifth pillar on due diligence. This is a much bigger deal than the requirement to identify beneficial owners:

(5) Appropriate risk-based procedures for conducting ongoing customer
due diligence, to include, but not be limited to:
(i) Understanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile; and
(ii) Conducting ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information
.
[Abridged]

Now, in chorus, let’s start whining about when they will publish the examination procedures. wink
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#2077584 - 05/09/16 02:02 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
John Burnett Offline
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We've posted the changes to add new section 1010.230 and amend section 1020.210 in our FinCEN Regulations pages.
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#2077682 - 05/09/16 06:23 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
HMS Pippii Offline
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Thanks, Ken - that's a huge help! I highlight and annotate, but didn't start reading on page 205.
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#2077829 - 05/10/16 03:21 PM Re: CDD Rule Final - implementation 05/11/18 Elwood P. Dowd
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Your insight is extremely helpful. Thanks.

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#2077839 - 05/10/16 03:52 PM Re: CDD Rule Final - implementation 05/11/18 Elwood P. Dowd
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Thanks Ken. That will be very helpful.

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#2077877 - 05/10/16 05:11 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
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ACAMS Spotlight: Mastering Treasury’s New Customer Due Diligence Final Rule

Free Webinar from ACAMS

http://www.acams.org/mastering-treasurys-new-customer-due-diligence-final-rule/
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#2077885 - 05/10/16 05:27 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
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Thanks Big Dog!
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#2077886 - 05/10/16 05:30 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
Sunshine Lady Offline
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Yes, Thank you, I have already signed up.
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#2077892 - 05/10/16 05:44 PM Re: CDD Rule Final - implementation 05/11/18 Sunshine Lady
edAudit Offline
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You are here
Thanks signed up
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#2077909 - 05/10/16 06:30 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
Lilly C Offline
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thanks, Big Dog!! This should help us prepare.

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#2078021 - 05/11/16 12:28 PM Re: CDD Rule Final - implementation 05/11/18 Lilly C
Elwood P. Dowd Offline
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#2078779 - 05/16/16 01:58 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
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I listened to a webinar last week that stated we did not have to drill down if Company A was owned by Company B. We would just mark that there were no natural persons that own more than 25% and move on. However, I thought we had to make the customer go all the way to a person if they owned 25%. (Example: Company A owned by Company B which is owned by John Doe, so John Doe would be on the form.) I haven't got to the point in the regulation that discusses it. Can anyone clear this up and perhaps know what page it's on? Thank you!

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#2078780 - 05/16/16 02:02 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
John Burnett Offline
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You explain the requirement to the individual opening the account. He or she completes the form to indicate whether there are any 25% or more owners, and who they are. He or she is responsible for digging back through any layered ownership to provide this information, along with the name of one "control prong" individual, and attesting to its accuracy.
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#2078841 - 05/16/16 06:08 PM Re: CDD Rule Final - implementation 05/11/18 HMS Pippii
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Just a quick update - in the Federal Register, FinCEN noted the following:

Quote:
We decline to impose a categorical, retroactive requirement. Based on our understanding of the significant changes to processes and systems that will be required to implement this requirement simply on a prospective basis, we believe that retroactive application would be unduly burdensome. As we noted in the proposal, the absence of a categorical mandate to apply the requirement retroactively would not preclude financial institutions from deciding that collecting beneficial ownership information on some customers on a risk basis during the course of monitoring may be appropriate for their institution. In our assessment, we have concluded that financial institutions should obtain beneficial ownership information from customers existing on the Applicability Date when, in the course of their normal monitoring, the financial institution detects information relevant to assessing or reevaluating the risk of such customer (as more fully described in the sections below addressing the amended AML program requirements).


To me, this indicates Banks will not need to scrub their entire "legal entity" customer base and update with beneficial ownership information. However, it sounds like everyone will need to both define triggers (e.g. new account opening) for obtaining BO data and incorporate the collection and updating of BO information into their ongoing EDD reviews and capture it in the next cycle. But we'll see how the examiners handle this...
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#2078869 - 05/16/16 07:54 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
John Burnett Offline
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There are "sleepers" in here like this one that might not grab your attention the first time around. This paragraph and the "fifth pillar" are changes that should concern all financial institutions.
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#2079226 - 05/18/16 06:43 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
Pat Patriot Act Offline
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Two items I found particularly interesting:

Quote:
FinCEN does not expect the information obtained pursuant to the beneficial ownership requirement to add additional requirements with respect to Section 314(a) for financial institutions. The rule implementing Section 314(a), set forth at 31 CFR 1010.520, does not authorize the reporting of beneficial ownership information associated with an account or transaction matching a named subject


On the surface, at least to my understanding, it seems like beneficial owners will NOT be required to be scanned during the 314(a) process. If that is the case, I'm a bit surprised because it does not seem consistent with the spirit of the rule. I have an e-mail out to FinCEN for clarification.

I also have a question out to FinCEN concerning how the performance of CIP procedures on a beneficial owner effects opening a subsequent personal account. For example, if XYZ Corp opens an account with Jane Doe as the "controller"; will Jane Doe need to be CIP'd again if she opens a personal account? (To me it seems like the answer will be "yes", but I'm looking for confirmation.)

I'd encourage everyone to familiarize themselves with all of the exceptions and contact FinCEN with as many questions as possible.
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#2079300 - 05/19/16 01:20 PM Re: CDD Rule Final - implementation 05/11/18 WonderWoman
John Burnett Offline
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I agree that Jane Doe would have to be treated as a new customer for CIP purposes because her status as a beneficial owner of an existing customer would not make her a current account holder (whether or not she's a signer on the entity account).
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