Don’t Let the Finer Points of Beneficial Ownership Procedures Slip Through the Cracks
Don’t Let the Finer Points of Beneficial Ownership Procedures Slip Through the Cracks
With the May 11th effective date for compliance with the final CDD rule looming, much focus has been placed on whether financial institutions will be ready with the correct form to collect beneficial ownership data, whether core system vendors will roll out beneficial ownership fields in time, which events will become your institution’s trigger events, or how customers will react to the new requirements. In addition to juggling these well-deserved concerns, and while waiting for FinCEN’s widely anticipated next FAQs, financial institutions should be mindful of some of the finer points not garnering as much attention:
- The address provided for the beneficial owner must be the owner’s physical home address – not the entity’s business address.
- Credit reports may not be pulled for beneficial owners as a method of identification verification for a loan transaction, unless the owner is also a guarantor on that loan.
- Use caution with ChexSystems as identification verification for beneficial owners for new deposit accounts – ChexSystems may only be run if the credit header data is not included.
- A copy of the beneficial owner’s identification may be accepted, but does not need to be notarized unless your institution’s policy requires this step.
- Be mindful of record retention of identification copies for loan transactions since the retention of copies within underwriting documentation could lead to potential Fair Lending issues.
Initial and ongoing training for frontline and lending personnel is an essential part of your institution’s compliance with the final rule. Once you have the forms in place and the vendor in line, start to review the finer points with your team to ensure nothing slips through the compliance cracks!
For additional information contact jmixtacki@fosaudit.com.
Don’t Let the Finer Points of Beneficial Ownership Procedures Slip Through the Cracks | Julie J. Mixtacki