US Treasury implements further legislation to combat anti-money laundering

After months of speculation, the US Treasury has announced the new procedure for Customer Due Diligence (CDD), which will impose new obligations on financial institutions in America to identify the Beneficial Ownership of all corporate clients, and directly pass these details on to the Department of Justice.

US Treasury implements further legislation to combat anti-money laundering

The Treasury in the US also released a statement at the time of the proposal, stating that the original schedule for implementation was too soon, and therefore an extension to the introduction period will be applicable, extending it from 1 year to 2 years.

The feedback on the original proposal was that the list of exemptions was too narrow so this has also been extended. This will allow financial institutions to use their own beneficial ownership form instead of a standard Internal Revenue Service form, as long as the required information is collected.

As well as placing these new obligations on financial institutions, the rule also amends the current Bank Secrecy Act regulations to make several components of customer due diligence obvious that have been expected under present guidelines, called the Treasury's Financial Crimes Enforcement Network FinCEN.

The implementations will stop foreigners taking advantage of the current system in order to hide assets or financial activity behind anonymous US-based shell companies which traditionally used to have no requirement to report to the Inland Revenue Service.


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