WASHINGTON— The Financial Crimes Enforcement Network (FinCEN) said it is providing regulatory relief to banks and other covered financial institutions by easing certain requirements under its 2016 Customer Due Diligence (CDD) Rule.
In an order announced by FinCEN, institutions will no longer be required to identify and verify the beneficial owners of a legal entity customer each time that customer opens a new account, provided the customer’s ownership information has already been collected and remains unchanged.
The agency said the change is intended to reduce duplicative compliance steps while allowing financial institutions to continue managing risks associated with money laundering and illicit finance.
Old Vs. New
The 2016 CDD Rule requires covered institutions to identify and verify individuals who own or control legal entity customers, a measure designed to improve transparency and prevent criminals from using shell companies to obscure their identities.
FinCEN said the updated approach recognizes that repeatedly gathering the same ownership information for existing customers can create unnecessary burden without materially improving risk detection. Financial institutions are still expected to maintain appropriate risk-based procedures and update beneficial ownership information when they detect changes or identify heightened risk.
Treasury officials described the move as part of a broader effort to modernize anti-money-laundering compliance and align regulatory expectations with more efficient, risk-focused practices.
Broader BSA Obligations Remain
The relief does not alter institutions’ broader obligations under the Bank Secrecy Act, including requirements to monitor transactions, report suspicious activity and maintain effective anti-money-laundering programs, FinCEN said.
Financial institutions and industry groups have long argued that repeated certification requirements under the CDD framework added operational costs and slowed account-opening processes for established business customers. Regulators emphasized that the change is meant to streamline compliance while preserving safeguards intended to prevent misuse of the U.S. financial system.
