FinCEN Proposes Heightened Customer Due Diligence Requirements for Financial Institutions
The U.S. Treasury Department's FinCEN unit recently issued proposed rules requiring banks, broker-dealers and various other financial institutions to identify and verify the beneficial owners of legal entity customers as part of their customer due diligence procedures. Under FinCEN’s so-called “look-through requirement," a beneficial owner would generally include any natural person who owns 25% or more of a legal entity or who has significant control over a legal entity. In the case of complex, multi-level legal structures, the look-through requirement may present significant compliance challenges for financial institutions.