FinCEN’s new CIP beneficial owner rules may hinder the ability of shell and nominee companies to directly access the US financial system without disclosing the natural persons who own 25% or more of the company. Pooled investment vehicles and certain other legal entities, however, may have limited disclosure obligations regarding their beneficial owners.
On May 2, 2016, the Financial Crimes Enforcement Network (FinCEN), a bureau within the US Department of the Treasury responsible for implementing US anti-money laundering (AML) laws, finalized rules that enhance the customer due diligence (CDD) obligations of certain US financial institutions and that make related changes to each financial institution’s AML program rule obligations (Final Rules). The financial institutions subject to the Final Rules include (i) banks, (ii) broker-dealers in securities, (iii) mutual funds, and (iv) futures commission merchants (FCMs) and introducing brokers in commodities (IBCs) (collectively, the Covered Financial Institutions). The Final Rules become effective on July 11, 2016, but Covered Financial Institutions have until May 11, 2018 to bring themselves into compliance.