"Banks shouldn’t be middleman in revealing true account owners" by Daniel P. Stipano (American Banker)
American BankerDaniel P. Stipano
The objectives of a recent Financial Crimes Enforcement Network rule — requiring financial firms to verify the identities of true account owners — are undoubtedly laudable. But whether the regulation achieves those objectives is another question.
The agency’s Customer Due Diligence rule went into effect earlier this year. It requires banks, brokers and other entities to collect information about any individuals who own or control companies when those companies open an account. It also requires the institutions to include procedures in their anti-money-laundering program to understand the nature and purpose of the accounts, monitor them for suspicious activity and keep account information up to date.
Broadly speaking, Fincen designed the rule to enhance financial transparency. By identifying a legal entity’s beneficial owners, financial institutions can better understand and manage their AML risks. And, more importantly, law enforcement and regulators can more easily combat money-laundering and other financial crimes.