On May 11, 2018, the FFIEC released new examination procedures for the recent “Customer Due Diligence Requirements for Financial Institutions.” These procedures are intended to be utilized by each regulatory agency - meaning they apply to all banks, savings and loans, savings associations, and credit unions - and will be a part of a financial institution’s BSA examination. These new procedures replace the prior procedures and financial institutions should expect examiners to utilize them in the near future.
In their release, the FFIEC provided two seperate documents:
Customer Due Diligence - Overview and Examination Procedures
Beneficial Ownership for Legal Entity Customers - Overview and Examination Procedures
The full release can be found here.
Customer Due Diligence - Overview and Examination Procedures
The first document released by the FFIEC provides the examination procedures for a financial institution’s customer due diligence (CDD) program. This nine page document provides an overview of CDD requirements, discusses the requirements for establishing a customer risk profile, explains the expectations for understanding the nature and purpose of a customer relationship (including what to look at for higher risk profile customers and expectations for ongoing monitoring of the customer relationship). The document concludes with just over a page of exam procedures which include nine different steps for examiners to take. The full document can be found here.
Beneficial Ownership for Legal Entity Customers - Overview and Examination Procedures
The second document released by the FFIEC provides the examination procedures for testing the new beneficial ownership requirements for legal entity customers. This nine page document provides an overview of the new rules, provides one page of exam procedures which include just for steps, and concludes with an appendix that further explains the new beneficial ownership rules. The full document can be found here.
