Know the next steps in CDD rule compliance

See how financial institutions are streamlining account opening and keeping their compliance processes on track

Preparing to meet FinCEN’s CDD rule requirements, enacted in May 2018, was among the biggest challenges financial institutions faced this year. Looking to 2019, how can organizations stay ahead of the curve on compliance requirements? The answer for many financial institutions is to start their risk assessments at account opening.

See how financial institutions are streamlining account opening and finding opportunities to keep their compliance processes on track: 

The first step in assessing risk during the onboarding process is to confirm: Are these individuals – or entities – who they say they are?

Put this way, meeting the CDD rule’s identity verification requirements sounds straightforward. But the new beneficial ownership identification requirement adds an extra layer to account opening, mandating financial institutions collect specific information for each individual qualifying as a beneficial owner.   

This is why many financial institutions now collect comprehensive information at the outset of the customer relationship. According to a recent Thomson Reuters survey, 40 percent of respondents now ask for enhanced due diligence (EDD) information at account opening, compared with 31 percent last year.

Gathering this information at account opening streamlines CDD rule compliance by meeting “know your customer” requirements while addressing beneficial ownership issues. Making the most of overlaps like these is at the heart of developing efficient processes.

Another opportunity for aligning efficiencies is ensuring your account opening process mirrors what your organization has determined as its risk appetite.     

Using a configurable onboarding tool allows you to set up definitions, sets of rules and controls to identify risk in your organization. You can create multiple definitions that can be applied to different groups, allowing the onboarding department to use a different profile than the BSA department, for example.

You can further streamline the process by applying different levels of granularity and weighting to certain elements, which can be especially useful for higher-risk groups requiring a tighter look or a more difficult grading or scoring process.  

Customizing your compliance process around your organization’s risk tolerance saves time by flagging only the elements that matter to your organization and filtering out what’s not as important.    

Also critical for an efficient compliance process is having all the data you base your decisions on in one place. When conducting EDD to onboard higher-risk customers, look for a tool enabling you to make an assessment by providing one report that shows everything from asset information and business connections to negative news, social media and more.  

From account opening and beyond, a streamlined process maximizes limited resources and enables you to make informed decisions faster. Collecting comprehensive information at the outset of the customer relationship and applying your organization’s risk tolerance from the start are essential to keeping your compliance processes running smoothly.

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