Is Your Credit Union Ready for May 2018? 4 Steps to EDD Compliance

  • Using non-documentary methods –Credit unions aren’t required to use non-documentary methods, but if such methods are used, the procedure must state which of them will be used and when. Examples include contacting a member, verifying information the member provides with a consumer reporting agency, researching a public database, checking references with other financial institutions or obtaining a financial statement.
  1. Identify and verify beneficial owners of legal entity members. This represents the enhanced portion of the new rule. Legal entities include a corporation, a limited liability company or any other type of organization created by filing with the state’s secretary of state or other public office, including an entity formed under the laws of a foreign jurisdiction.

FinCEN requires institutions to complete a form (obtained from the agency’s website)that provides the name, address, date of birth and Social Security number (or passport number for non-U.S. citizens) for each person who owns 25 percent or more equity interest in the legal entity. This requirement also extends to anyone with significant management responsibility (e.g., a CEO, CFO, COO, managing member, general partner, president, vice president, treasurer). Your credit union also may ask to see a driver’s license or other identifying document for each beneficial owner listed on the form. The person opening the account must also provide his/her name and title as well as the legal address of the entity.While the rule doesn’t require a credit union to validate the information collected on this form, Sollievo recommends to our clients that the information presented be documented and validated.

  1. Understand the nature and purpose of member relationships.After a member’s identity has been verified,ask additional questions to determine the risk level and establish expectations about the types of transactions that will be made. For example:
  • Is the account for an individual or a business?
  • Is the member retired, a child or a working adult?
  • Is the business seasonal?
  • How will deposits be made and will there be transfers from foreign banks?
  • What types of credit union products/services will the business use?

Members may fall in the high-risk category because of their location, types of products/services they use or type of business owned. For example, a member....-->


The deadline for compliance with enhanced due diligence looms. Is your credit union ready to meet the requirements? Keep reading for a rundown of the four key steps, along with some professional recommendations, your CU should be following in preparation of its due diligence process.

Beginning May 11, 2018, all covered financial institutions must comply with the Financial Crimes Enforcement Network’s (FinCEN’s) final rule for enhanced due diligence (EDD) requirements under the Bank Secrecy Act. The regulation became effective July 11, 2016, but institutions were given 22 months to institute procedures to provide the necessary identificati...

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