Avoid the BSA Compliance Heat

Ania Scanlan
Ania Scanlan


By Ania Scanlan

The latest flame-worthy issue in Bank Secrecy Act/anti-money laundering compliance is the Customer Due Diligence final rule, which requires banks to collect and verify the personal information of the “beneficial owners” of businesses that open accounts at banks.

The rule includes two prongs to determine beneficial owners. Under the “ownership prong,” a beneficial owner is an individual who, directly or indirectly, owns 25 percent or more of the equity interests of the company. Under the “control prong,” a beneficial owner is an individual with significant responsibility to control, manage or direct the company (such as a chief executive officer, comptroller or senior vice president).

Under the final rule, banks must establish and maintain written procedures to identify and verify all beneficial owners at account opening, unless an exclusion or exemption applies to the customer or account.

The Customer Due Diligence rule also amends existing anti-money laundering program requirements. Under the new requirements, banks:

  • will be required to establish risk-based procedures for conducting ongoing due diligence;
  • must develop customer risk profiles;
  • must implement ongoing monitoring to identify and report suspicious activity; and
  • based on risk, must update customer information.

Banks will face heated examiners if they do not comply by the mandatory compliance date of May 11, 2018.

Ania Scanlan (ania.scanlan@icba.org) is ICBA’s vice president, Community Bank Compliance Center.