On May 11, the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) published its Final Rule (Rule) requiring covered financial institutions, including, banks, brokerdealers, mutual funds, and money services businesses, to establish enhanced customer due diligence (CDD) measures under the Bank Secrecy Act (BSA).

The Rule has two primary components. First, it requires covered financial institutions to collect and verify information about the individuals – known as beneficial owners – who own or control any ‘legal entity customers’ of the financial institution. Second, the Rule establishes a fifth pillar of anti-money laundering programs by requiring that covered financial institutions develop customer risk profiles and conduct ongoing monitoring to identify suspicious activity, and, if necessary, update relevant customer information. Covered financial institutions must comply with the Rule by May 11, 2018.