May 11th is almost here. Gone will be the days where vast sums of unchecked money flow into the U.S. via shell companies and other forms of legal structures designed to keep ultimate beneficial owners anonymous. At least, that’s the intent of the new Beneficial Ownership Rule, aka the Customer Due Diligence (CDD) rule.
Brett Wolf, Reuters Senior Financial Crimes Correspondent
Jim Richards, founder of RegTech Consulting
On May 11, the Financial Crimes Enforcement Network (FinCEN) will begin enforcement of this rule for financial institutions, which will now be required to take a stronger part in customer due diligence, specifically identifying and verifying the beneficial owners of legal entity customers. Simply put, banks need to know who their customers are. Why? Because it is a key way to disrupt money launders and those who finance terrorists.
Holly Sais Phillippi, Partner Director in Governance, Risk & Compliance for Thomson Reuters Legal
Prior to the Beneficial Ownership Rule, banks were not required to know the identity of the beneficial owners who own or control their legal entity customers — and financial crooks liked it that way.
The new rules came about because the U.S. government has taken a stronger stance in the fight against money laundering, terrorist financing and other financial crimes since revelations from the Panama Papers and the Paradise Papers. Let’s also be clear. This is not legal tax avoidance we are talking about, but illegal tax evasion on many levels.
Turning to the Experts
In a new podcast, we turned to the experts for answers, speaking to Jim Richards, founder of RegTech Consulting and former Wells Fargo executive in its financial crimes unit. Richards will speak with Brett Wolf, Reuters Senior Financial Crimes Correspondent, and Holly Sais Phillippi, Partner Director in Governance, Risk & Compliance for Thomson Reuters Legal.
