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U.S. Customer Due Diligence Requirements for Financial Institutions

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The Customer Due Diligence Rule (“CDD Rule”) issued by the U.S. Department of the Treasury Financial Crimes Enforcement Network (“FinCEN”) requires covered U.S. financial institutions to identify and verify Ultimate Beneficial Owners (“UBOs”), as well as one Control Person, of a legal entity when opening new accounts, unless the entity falls within a listed exception under the rule.   Such information must include name, street address, and date of birth.  A U.S. person must provide a Social Security Number, and a non-U.S. person must provide either a passport number and country of issuance or other similar identification number.  To verify this information, the customer may be asked to provide a copy of valid government-issued identification (such as a driver’s license or passport).

When is the rule applicable?

  • From May 11, 2018 for all legal entity customers opening a new account

What is the definition of UBO and Control Person?

  • UBO: Any individual who directly or indirectly owns 25% or more of the legal entity customer
  • Control Person:  An individual with significant responsibility to control, manage, or direct the legal entity customer, such as a Chief Executive Officer or Chief Operating Officer

Most U.S. publicly-traded, regulated, and government entities are excluded from these CDD Rule requirements.  The requirements and exceptions are described in detail in the CDD Rule, 31 CFR 1010.230.

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