ICB Credit: 2.5 CRCM

On May 11th, 2016 FinCEN's codified previously implied guidance with explicit Customer Due Diligence (CDD) requirements (essentially took guidance that had been suggested over the years and put it in the form of a regulation at 31 C.F.R.). Banks will now need to formally understand "the nature and purpose" of legal entity accounts in order to develop an initial risk profile and follow that up with ongoing monitoring. Most of the headlines have addressed the new Beneficial Ownership rule but the Preamble to the new rule makes clear the Beneficial Ownership requirements are only one of the four elements of a CDD Program which now constitute the 5th Pillar. The 5th Pillar language is already being addressed also verbatim in recent Consent Decrees. Don't be the next bank to think that it's still business-as-usual in the BSA exam world and examiners will give every bank a pass on enhancing their CDD programs until May 2018. The regulators are using the current guidance, which is very similar to the new rule, to double down on their scrutiny in this area.

This two-hour program identifies which guidance has now become a regulatory requirement and should be implemented sooner rather than later. We will address the CDD guidance in the Core Examination section of the Interagency BSA/AML Examination Manual as well as various Expanded Examination sections.

The program will include a review of the major regulatory findings regarding the customer risk profile process along with the need for ongoing monitoring.

WHY?
FinCEN, and banking regulatory agencies, believe that requiring banks to perform effective CDD on its customer relationships will assist banks in better understanding who the actual customer is and what type of transaction(s) they normally conduct. These actions should allow the bank to better set a baseline for the identification of normal activity in order that the bank can then more easily identify abnormal activity which might assist in the reporting of suspicious activity. The second purpose of the new rule is to allow banks to assist the government, and law enforcement, in combating numerous types of illicit financial activities including tax evasion, terrorist financing, money laundering and sanction violations among others.

Written, Board-approved BSA/AML Programs have long addressed the four pillars but your bank will now need to revise portions of the Internal Controls section currently in its BSA Policy into a new fifth pillar and make other simple revisions.

Participants receive a detailed manual that serves as a valuable resource long after the conclusion of the program which will serve as a vital resource in enhancing your bank's written BSA CDD Program

TOPICS
Upon completion of the program, participants understand regulatory expectations regarding:

• Higher risk customer types that may need more frequent monitoring in comparison to lower risk customer types that need less frequent monitoring;
• BSA policy and program requirements and changes;
• Regulatory requirements;
• Types of accounts to include in CDD monitoring;
• Board and Senior Management expectations and responsibilities;
• Baseline determination of "normal" vs "suspicious" activity;
• Development of an initial customer risk profile;
• Threshold for updating a customer profile;
• Connecting the dotted line between unusual CDD activity and the filing of a SAR;
• CDD and its impact upon the bank's annual BSA Risk Assessment;
• How to avoid examination and audit findings;
• Record Retention; and
• Transactional internal testing.