The US Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued its final due diligence rule requiring banks and other trade finance providers to collect information on beneficial owners.

But there are fears that the impact of the rule could precipitate so-called derisking, as banks decide to avoid certain categories of accounts for which ownership cannot be easily established.

Collect and verify

The rule requires that financial institutions – including banks, brokers or dealers in securities, mutual funds, futures commission merchants, and introducing brokers in commodities – collect and verify the personal information of the beneficial owners who own, control, and profit from companies when those companies open accounts.

A beneficial owner is an individual who owns more than 25 per cent of the equity interests in a company or is the single individual who exercises control.

Procedures and timings

Banks will be required to use Customer Identification Programme procedures to verify the identity of beneficial owners.

The rule includes several exceptions from coverage. It is effective 11 July 2016 but compliance is not mandatory until 11 May 2018.


While the need for transparency of ownership is becoming increasingly established worldwide, the American Bankers’ Association (ABA) – which in principle supports the new rule – has expressed concerns about its impact.

ABA president and CEO, Rob Nichols says that, “the application of the rule could add to the existing challenges of maintaining certain account relationships when customer information is not easily obtainable, leading to further derisking.”