Fincen requires financial institutions to obtain beneficial ownership information for legal entity customers

2016 ◽  
Vol 17 (4) ◽  
pp. 34-44
Author(s):  
Ignacio Sandoval ◽  
Charles Horn ◽  
Melissa Hall
Keyword(s):  
Financial Institutions ◽  
Financial Services ◽  
Due Diligence ◽  
Legal Entity ◽  
Content Type ◽  
Financial Crimes ◽  
The Us ◽  
Beneficial Ownership ◽  
To Come ◽  
Customer Due Diligence

Purpose To provide an overview of the legal entity customer due diligence rule recently adopted by the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of the Treasury. Design/methodology/approach This paper provides an overview of the requirements of the legal entity customer due diligence rule as well as some observations regarding the scope of the rule, its interplay with other regulatory requirements, and some of the rule’s ambiguities. Findings While the preamble to the new rule suggests that FinCEN was attempting to accommodate industry concerns, the literal terms of the rule may have the opposite effect. Practical implications Although financial institutions will have until May 2018 to come into compliance with the rule’s requirements, they should begin developing the infrastructure to support compliance with the rule as soon as possible. Originality/value Practical insights into issues that financial institutions may encounter when implementing the rule’s requirements from experienced financial services lawyers.

FinCEN issues long-awaited guidance on the customer due diligence rule

2018 ◽  
Vol 19 (4) ◽  
pp. 13-16
Author(s):  
Satish M. Kini ◽  
Robert T. Dura ◽  
Zila Reyes Acosta-Grimes
Keyword(s):  
Financial Institutions ◽  
Regulatory Compliance ◽  
Customer Relationship ◽  
Due Diligence ◽  
Information Requirements ◽  
Information Retention ◽  
Content Type ◽  
Publicly Traded Companies ◽  
Beneficial Ownership ◽  
Customer Due Diligence

Purpose To highlight pertinent points in the frequently-asked questions (FAQs) issued on April 3, 2018 by the US Treasury Department Financial Crimes Enforcement Network concerning its Customer Due Diligence Requirements for Financial Institutions (“CDD Rule”), which were published on May 11, 2016 and became effective on May 11, 2018. Design/methodology/approach Discusses clarification and guidance in the FAQs concerning beneficial ownership requirements for administrative and internal accounts, claims for exclusion from the definition of legal entity customer, information requirements for pooled investment vehicles, the requirement for beneficial ownership information from foreign publicly-traded companies, information requirements for existing customers, certification of beneficial ownership information when existing accounts are renewed, requirements for refreshing existing beneficial ownership information, retention of beneficial ownership records, aggregation for currency transaction reporting, and requirements to understand the nature and purpose of a customer relationship. Findings Covered financial institutions and industry associations have sought clarification and guidance on a range of topics, several of which have been addressed in the FAQs. Originality/value Expert guidance from lawyers focused on regulatory, compliance and transactional issues for financial institutions.

FIFA – highlighting the links between global banking and international money laundering

2018 ◽  
Vol 21 (4) ◽  
pp. 498-512 ◽  
Author(s):  
Mohammed Ahmad Naheem
Keyword(s):  
Money Laundering ◽  
Financial Services ◽  
Banking Sector ◽  
Due Diligence ◽  
Content Type ◽  
Services Sector ◽  
Financial Services Sector ◽  
Global Banking ◽  
Beneficial Ownership ◽  
The Impact

PurposeThis paper uses the recent (August 2015) FIFA arrests to provide an example of how illicit financial flows are occurring through the formal banking and financial services sector. The purpose of this paper is to explore which elements of anti-money laundering (AML) compliance need to be addressed to strengthen the banking response and reduce the impact of IFFs within the banking sector.Design/methodology/approachThe paper is based on the indictment document currently prepared for the FIFA arrests and the District Court case of Chuck Blazer the FIFA Whistleblower. It uses the banking examples identified in the indictment as typologies of money laundering and wire fraud. Corresponding industry reports on AML compliance are included to determine where the major weaknesses and gaps are across the financial service.FindingsThe main findings from the analysis are that banks still have weak areas within AML compliance. Even recognised red flag areas such as off shore havens, large wire transfers and front companies are still being used. The largest gaps still appear to be due diligence and beneficial ownership information.Research limitations/implicationsThe research topic is very new and emerging topic; therefore, analysis papers and other academic writing on this topic are limited.Practical implicationsThe research paper has identified a number of implications for the banking sector, addressing AML deficiencies, especially the need to consider the source of funds and the need for further enhanced due diligence systems for politically exposed and influential people and the importance of beneficial ownership information.Social implicationsThis paper has implications for the international development and the global banking sector. It will also influence approaches to AML regulation, risk assessment and audit within the broader financial services sector.Originality/valueThe originality of this paper is the link between the emerging issues associated with allegations of bribery and corruption within FIFA and the illicit financial flow implications across the banking sector.

The US department of labor’s final “fiduciary” rule incorporates concessions to financial service industry but still poses key challenges

2016 ◽  
Vol 17 (4) ◽  
pp. 1-22
Author(s):  
Kenneth J. Laverierre ◽  
Matthew H. Behrens
Keyword(s):  
Financial Institutions ◽  
Asset Management ◽  
Financial Services ◽  
Service Industry ◽  
Content Type ◽  
Individual Retirement Accounts ◽  
The Us ◽  
Investment Advice ◽  
Management Recommendations ◽  
The Impact

Purpose To describe the main provisions of the US Department of Labor’s final “fiduciary” rule and its related prohibited transaction exemptions and the key challenges the rule poses for financial advisers. Design/methodology/approach This article describes the impact of the new “fiduciary” rule on broker-dealers, banks and other financial organizations who will, for the first time since the passage of ERISA, be subject to ERISA’s fiduciary standards and remedies when providing investment and asset management recommendations to individual retirement accounts and other retail retirement clients. Findings The most immediate impact of the rule will be on the compensation practices at broker-dealers and other financial institutions and on the fee and revenue sharing arrangements among funds, fund sponsors and the financial institutions that offer investment advice to retail retirement clients. Although the new rule responds to many of the concerns raised by the financial services industry, compliance with the rule will require the restructuring of pay and compliance policies at financial institutions servicing retail clients. Originality/value Practical guidance from experienced ERISA lawyers.

An exploration of the current regulatory aspects of money laundering in South Africa

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Howard Chitimira
Keyword(s):  
South Africa ◽  
Financial Markets ◽  
South African ◽  
Money Laundering ◽  
Financial Institutions ◽  
Original Research ◽  
Due Diligence ◽  
The South ◽  
Content Type ◽  
Customer Due Diligence

Purpose Money laundering activities were allegedly rampant and poorly regulated in the South African financial markets and financial institutions prior to 1998. In other words, prior to the enactment of the Prevention of Organised Crime Act 121 of 1998 as amended (POCA), there was no statute that expressly and adequately provided for the regulation of money laundering in South Africa. Consequently, the POCA was enacted to curb organised criminal activities such as money laundering in South Africa. Thereafter, the Financial Intelligence Centre Act 38 of 2001 as amended (FICA) was enacted in a bid to, inter alia, enhance financial regulation and the combating of money laundering in the South African financial institutions and financial markets. Design/methodology/approach The paper provides an overview analysis of the current legislation regulating money laundering in South Africa. In this regard, prohibited offences and measures that are used to curb money laundering under each relevant statute are discussed. The paper further discusses the regulation and use of customer due diligence measures to combat money laundering activities in South Africa. Accordingly, the regulation of customer due diligence under the FICA and the Banks Act 94 of 1990 as amended (Banks Act) is provided. Findings It is hoped that policymakers and other relevant persons will use the recommendations provided in the paper to enhance the curbing of money laundering in South Africa. Research limitations/implications The paper does not provide empirical research. Practical implications The paper is useful to all policymakers, lawyers, law students, regulatory bodies, especially, in South Africa. Social implications The paper seeks to curb money laundering in the economy and society at large, especially in the South African financial markets. Originality/value The paper is original research on the South African anti-money laundering regime.

US financial services will help mainstream cryptos

2021 ◽  
Keyword(s):  
Financial Services ◽  
Financial Assets ◽  
Due Diligence ◽  
Bond Price ◽  
Retail Sales ◽  
Content Type ◽  
Price Movements ◽  
Customer Due Diligence ◽  
Exchange Unit

Significance Yet snowballing interest outpaces crypto's use in any of the three main roles of money: a medium of exchange, unit of account or store of value. Crypto accounts for a sliver of US financial assets and retail sales. It remains overshadowed by its reputation as the currency of cybercriminals. Impacts Safeguards to prevent criminals from exploiting crypto will hinder legitimate crypto innovation. Transaction monitoring and know-your-customer due diligence will become a higher priority for crypto exchanges, reducing anonymity. Crypto's non-correlation with equity and bond price movements, an investor attraction, will lessen with broader use

HSBC Mexico AML failings: a case study

2016 ◽  
Vol 19 (2) ◽  
pp. 208-218 ◽  
Author(s):  
Patrick O’Sullivan
Keyword(s):  
Task Force ◽  
Senior Management ◽  
Due Diligence ◽  
Content Type ◽  
Regulatory Guidance ◽  
The Us ◽  
Compliance Officer ◽  
Customer Due Diligence ◽  
Academic Resources

Purpose This paper aims to provide a brief overview of the anti-money laundering (AML) failings documented by the US Permanent Subcommittee on Investigations found in Hong Kong and Shanghai Banking Corporation (HSBC) Mexico. This paper focuses in on the key areas of concern raised by the 2012 report in respect of HSBC Mexico (HBMX) such as failure to undertake correct customer due diligence on high risk customers and repeated failings by senior management at HBMX to remedy these problems. Design/methodology/approach The relevant parts of the Subcommittee report relating to HBMX were examined along with the evidence submitted to the Subcommittee. From this examination, the author then noted the key examples of AML failings at HBMX and then commented on these examples while also referring to academic and regulatory guidance such as that from Financial Action Task Force. Findings Certain proposals are made throughout the paper, but these remain only suggestive. The key point is that the failings evident in HBMX may very well arise in other institutions, and this paper proposes how these failings may be resolved. Research limitations/implications Research for this paper remained limited to second-source references such as the Subcommittee report and the listed Exhibits along with other academic resources. The paper was also peer reviewed by a compliance officer. However, examining the paper from a more practical viewpoint may have struck a better balance between an optimal and realistic level of compliance. Practical implications Adopting an analytic approach to the subject of AML controls should aid those who work in compliance daily while also generating further commentary among both regulators and senior management within financial institutions. Originality/value The paper is the only one to date to focus on one geographical strand of the AML failings at HSBC and then comment on this from an academic perspective.

Distance Personal Identification in the On-line Environment: Problems of Financial Institutions in the EU

2021 ◽  
Vol 12 (3) ◽  
pp. s150-s166
Author(s):  
Marius Laurinaitis ◽  
Darius Stitilis ◽  
Irmantas Rotomskis ◽  
Oksana Novak ◽  
Oleksii Lysenok
Keyword(s):  
Financial Institutions ◽  
Financial Services ◽  
Personal Data ◽  
Legal Regulation ◽  
Personal Identification ◽  
Individual Member ◽  
Due Diligence ◽  
Member States ◽  
Customer Due Diligence ◽  
The Eu

Electronic financial services are of key importance in the EU. However, the actual policies adopted in the field by individual member states differ from country to country. A great deal of legal acts have been adopted by the EU to encourage FinTech development, to prevent money laundering and in particular to lay down secure procedures of personal identification. However, measures applied by individual member states frequently differ. The purpose of this article is to focuses on actual legal instruments used by EU financial institutions and FinTech agencies in the digital environment for client identification and on major problems faced by FinTech companies rendering modern financial services. Financial institutions and FinTech agencies often face the problem of client identification which is of key importance in the field. The complex legal regulation of the field has been extended to include such concepts as customer due diligence, simplified customer due diligence, enhanced customer due diligence and customer identification in physical absence. Each of the ways of identification differs in the scope of collected personal data, methods of data collection, legal regulation and the use of technological instruments.

Is your anti-money laundering program ready for FinCEN’s Customer Due Diligence Rule?

2018 ◽  
Vol 19 (2) ◽  
pp. 42-44
Author(s):  
Rick Kuhlman ◽  
Jeff Ziesman ◽  
Carolyn Browne ◽  
Jason Kempf
Keyword(s):  
Money Laundering ◽  
Due Diligence ◽  
Securities Litigation ◽  
Content Type ◽  
Policies And Procedures ◽  
Financial Crimes ◽  
Need To Evaluate ◽  
Final Rule ◽  
Customer Due Diligence ◽  
Practical Implications

Purpose The purpose of this paper is to bring broker-dealers’ attention to the upcoming deadline for compliance with the Financial Crimes Enforcement Network’s (FinCEN’s) final rule on Customer Due Diligence Requirements for Financial Institutions (the CDD Rule). Design/methodology/approach The paper explores the origins of the anti-money laundering (AML) requirements and then explores the new CDD Rule requirements as outlined by FINRA Regulatory Notice 17-40. Findings Firms are likely largely already in compliance with most aspects of the CDD Rule. Practical implications Most firms likely will not need to make any significant changes to their AML polices. However, for some they will need to evaluate and modify their AML policies and procedures. Originality/value Practical guidance is obtained from experienced broker-dealer, investment adviser, securities litigation and compliance lawyers.

The international strength of the euro will grow

2021 ◽  
Keyword(s):  
Euro Area ◽  
Financial Services ◽  
Raw Materials ◽  
Domestic Demand ◽  
Content Type ◽  
The Us ◽  
Us Dollar ◽  
Strategic Autonomy ◽  
Geopolitical Risks ◽  
The Eu

Significance The proposals identified areas where the euro could potentially become more dominant, such as the issuance of green bonds, digital currencies, and international trade in raw materials and energy. Ambitions to enhance the international leverage of the euro are being driven by the aim to strengthen EU strategic autonomy amid rising geopolitical risks. Impacts Developing its digital finance sector would be an opportunity for the EU to enhance its strategic autonomy in financial services. Challenging the US dollar would require the euro-area to rebalance its economy away from foreign to domestic demand. Member state division will prevent the economic reconfiguration the euro-area needed to make the euro a truly global currency.

Sign in / Sign up

Export Citation Format

Share Document