Pending requirements that U.S. financial institutions more thoroughly vet their accountholders may especially challenge broker dealers, some of which are designing new systems to scrutinize investment advisers and others who control omnibus accounts and pooled investment vehicles, say sources. Set to take effect in May 2018, the U.S. Treasury Department's customer due-diligence rule will explicitly require that covered financial institutions take reasonable steps to identify persons owning 25 percent or more of firms that open accounts and verify the accuracy of data they receive, particularly from companies and other legal entities considered high-risk for money laundering and other financial crimes....
Over the past 15 years, wide-ranging regulatory views have been promulgated by U.S. financial regulators. While they are congressionally authorized to issue rules that implement the BSA, subsequent interpretations of those rules have morphed into quasi-rules of their own.
The Financial Industry Regulatory Authority will begin sharing more details from its examinations with brokerages and other firms later this year to clarify its expectations for complying with anti-money laundering protocols and managing risk, an official said Thursday.
Many compliance officers may have never heard of "circular ownership"- a corporate structure of holding companies and subsidiaries that financial institutions often struggle to map out and unravel during the customer-onboarding process.
Several of the world's largest financial institutions have moved quickly to limit risks posed by their corporate clients in the six months since U.S. officials finalized a long-anticipated customer due diligence rule, while smaller lenders have treaded a rougher path towards implementation.