Who is defined as a legal entity customer?Ī legal entity customer is defined as a corporation, LLC, or other entity created by the filing of a public document with the Secretary of State or similar office, a general partnership, and any similar entity formed under the laws of a foreign jurisdiction. What is required under the new Customer Due Diligence (CDD) rule?Īll banks and credit unions will be required to implement enhanced procedures used to identify and verify the beneficial owners of legal entity customers each time a new account (checking, savings, loan, safe deposit box, Certificate of Deposits) is opened.Įach individual, if any, who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, owns 25 percent or more of the equity interests of a legal entity customer AND a single individual with significant responsibility to control, manage, or direct a legal entity customer including an executive officer or senior manager (CEO, CFO, COO, Managing Member, General Partner, President, Vice President, or Treasurer or any other individual who regularly preforms similar functions).

These rules are an important part of assisting the government in the fight against financial crimes and national security threats. Effective May 11, 2018, new rules become effective that will expand customer due diligence requirements for banks.

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