WASHINGTON — The Financial Crimes Enforcement Network is seeking comment on a proposal that would require banks and other financial institutions to identify beneficial ownership of their accountholders.
The advanced notice of proposed rulemaking, which Fincen released Wednesday, would codify existing expectations for institutions' "customer due diligence" policies, a cornerstone of anti-money laundering programs.
The plan would cover banks, brokers or dealers in securities, mutual funds, commission merchants and commodities brokers, but could also be extended to other industries, according to the proposal.
Beneficial ownership of accounts can pose heightened risks because it can enable individuals to shield the identity — through shell companies, for example — of the true owner of assets derived from criminal activity, regulators said in joint guidance issued in 2010.
Despite efforts to clarify the expectations for reporting beneficial ownership information, Fincen said it is concerned about a lack of uniformity and consistency in the way financial institutions collect the information.
"The explicit requirement that a financial institution know its customers, and the risks presented by its customers, is basic and fundamental to both serving those customers and implementing a program that protects a financial institution from abuse by illicit actors," Fincen Director James H. Freis Jr. said in a press release issued Wednesday. "The comments we receive will help us balance the information needs of law enforcement with the responsibilities placed on the financial industry."
