Beneficial Ownership Next Steps: Checking in with your Core
There’s still time to prepare for beneficial ownership and the new CDD rule.
When the CDD final rule was announced in May of 2016, everyone was talking about it. What does it include? What do we need to change? What if I don’t comply? Since then, the conversations about how to prepare for beneficial ownership have quieted down a bit. (Tip: our beneficial ownership resource page has stayed up-to-date here – bookmark it for easy access!) However, that doesn’t mean you can just forget about it. In fact, examiners will start asking about your plan to comply with the new CDD rule well before May of 2018, so you’ll need to start making changes now.
So what are the next steps?
At this point, it’s time to check in with your core. What are their plans to help you capture beneficial ownership information at account opening? If you aren’t sure, it may be time to dig a little deeper. Reach out to the core directly and ask what their plan is. You will need to capture that information, even if the beneficial owner is not a customer at your institution.
Best case scenario, the cores will build in functionality to easily and efficiently capture beneficial ownership information at account opening. Worst case scenario, it’s not done on time. Perhaps, at a minimum, your core will introduce a special relationship code to flag beneficial owners. At this point, you can’t be entirely sure what changes each individual core will implement unless you ask.
Time will tell what the cores are planning to do, but it’s best not to wait on them completely. There are plenty of steps you can be taking in the meantime to prepare for beneficial ownership, such as:
- Utilize this checklist to assess your readiness
- Consider whether you will need additional frontline training
- Will you create a new beneficial ownership form? Will it be paper or electronic?
- Will you capture the minimum beneficial ownership percentage (ownership prong) stated in the ruling, or go beyond?
As you know, due diligence is the foundation of a strong BSA/AML program, and the new CDD rule is the most significant change to due diligence since the PATRIOT Act. There are a multitude of changes that will be needed, and you may not want to rely solely on your core. You may want to have a plan in place and/or something to supplement the capability that the cores will provide on their new account systems.
The brand new Due Diligence Manager tool from Banker’s Toolbox was designed to satisfy the new CDD rule. Whether or not your core specifically builds in functionality to capture beneficial owners in time for the deadline, Due Diligence Manager (available this summer) will allow you to be 100% compliant. It can either retrieve data through a feed from your core (this is the easiest, most efficient manner), or you can manually enter beneficial ownership information (this is a great fallback if you don’t want to wait on your core). Plus, this tool will simplify the collection, storage, maintenance and updating of all initial and ongoing CIP, CDD and EDD information, giving you a comprehensive tool for all areas of due diligence!
Though it seems the chatter around beneficial ownership has leveled out a bit, we cannot forget how important it is. That 2018 deadline is just around the corner, and regulators will want to see your progress starting now. At this point, it’s a good idea to check in with your core. Also, have a plan in place to address or supplement your account opening system’s functionality. The good news is, there’s still time to prepare for beneficial ownership.
Visit our beneficial ownership page for more resources and information on how to prepare for the new rule!