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BDs Must Implement Beneficial Ownership Due Diligence by May

Pursuant to recent FINRA guidance, broker-dealers will have until May 11, 2018 to amend their Anti-Money Laundering programs to include risk-based procedures for conducting ongoing customer due diligence as required FinCEN’s Customer Due Diligence Rule.  Most significantly, BDs must identify the beneficial owner of each account and implement risk-based procedures for verifying customer identities.  FINRA and FinCEN will allow firms to obtain such information by using FinCEN’s standard certification form.  FINRA calls this beneficial ownership requirement the “fifth pillar” of a required AML program, which must also include reasonable policies and procedures, independent testing, a designated AML officer, and ongoing training.

OUR TAKE: Next May might seem like a long way off, but the work required to implement this fifth pillar will be significant.  We recommend following FINRA’s guidance and using the FinCEN form as a starting point.

https://www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory-Notice-17-40.pdf

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