Just in time for the effective date of FinCEN’s Customer Due Diligence (CDD) and Beneficial Ownership Rules, on May 11, 2018 the Federal Financial Institutions Examination Council (FFIEC) published updates to its Bank Secrecy Act/Anti-Money Laundering Examination Manual. The FFIEC is an interagency body comprised of representatives of the U.S. Federal Reserve Board, the FDIC, OCC, CFPB, NCUA, and state banking regulators. The agencies’ changes (1) replace existing CDD sections of the manual and (2) add new Beneficial Ownership overview and exam procedures sections, in each case corresponding to the new CDD and Beneficial Ownership requirements.
The publication of this new content was announced through separate press releases by the FDIC, OCC, and NCUA. The OCC’s release (OCC Bulletin 2018-12) makes the technical point that the new CDD content replaces pages 56-59 of the FFIEC manual, last updated in 2014, and the FDIC’s release (FIL-26-2018) adds that the new sections will be incorporated into the manual in its next update. The FFIEC’s examination manual is used by the bank regulators in conducting supervisory BSA/AML exams and features step-by-step review procedures to be used by examiners, consistent with the FFIEC’s statutory purpose of establishing uniform forms and regulatory examination processes.
One doesn’t generally expect new substantive guidance or interpretation to emerge from the FFIEC examination procedures, but a review of this new content emphasizes the following:
(1) BSA/AML exams including scope periods on or after May 11, 2018 will feature scrutiny of new accounts opened on or after that date. At this point, the CDD and Beneficial Ownership rules are live and in full effect, and institutions will be expected to adhere to them. For example, the revised examiner’s guide specifies: “3. On the basis of a risk assessment, prior examination reports, and a review of the bank’s audit findings, select a sample of new accounts opened for legal entity customers since May 11, 2018 to review for compliance with the Beneficial Ownership Rule.” The transition and implementation period for this rule is officially over.