The U.S. Financial Crimes Enforcement Network’s formal plan for managing access to an impending database of beneficial ownership details and restricting how that information can be used is “fatally flawed,” a large and influential banking lobby advised Tuesday.
In a 12-page letter, the American Bankers Association and 51 state associations opined that by barring banks from using ownership details for any purpose other than complying with the customer due-diligence rule, or CDD rule, and prohibiting them from sharing that information outside the U.S., the plan, as currently written, would make the database “practically useless.”
FinCEN should instead allow banks to also use access to the details of beneficial owners “more broadly” to meet other requirements of the Bank Secrecy Act; permit them to transmit that information across their respective enterprises, including beyond U.S. borders; and, separately, revise the proposal to clarify that use of the database is voluntary, the ABA recommended.
“Further, while it is not part of the current proposal, if FinCEN is contemplating changing the amended CDD rule to require banks to verify the status of the beneficial owners provided by their customers, i.e., whether they are, in fact, the customer’s beneficial owners, we would be strongly opposed to it,” the ABA and state lobbyists wrote.
|Anti-money laundering , Know Your Customer
|ABA/Trade Associations , U.S.: FinCEN
|February 14, 2023