Customer Due Diligence Requirements for Financial Institutions; Correction (2024)

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Financial Crimes Enforcement Network (FinCEN), Treasury.

Correcting amendments.

FinCEN is making technical corrections to a final rule published in the Federal Register on Wednesday, May 11, 2016. The final rule relates to certain customer due diligence standards applicable to covered financial institutions, defined as banks, brokers or dealers in securities, mutual funds, and futures commission merchants and introducing brokers in commodities. As published, the final rule contains technical errors that could cause confusion if not corrected.

Effective Date: These corrections are effective September 28, 2017.

Applicability date: Covered financial institutions must comply with these rules and the rules published in the Federal Register on May 11, 2016 (81 FR 29398) by May 11, 2018.

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FinCEN Resource Center at 1–800–767–2825. E-mail inquiries can be sent to frc@fincen.gov.

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I. Background

On May 11, 2016, FinCEN published a final rule (81 FR 29398) entitled “Customer Due Diligence Requirements for Financial Institutions.” The final rule amends the Bank Secrecy Act regulations to include a new requirement for covered financial institutions to identify and verify the identity of beneficial owners of legal entity customers, subject to certain exclusions and exemptions. The final rule also amends the anti-money laundering (AML) program requirements for all covered institutions. This document makes technical corrections to the Certification Form located in appendix A to 31 CFR 1010.230 and adds a paragraph to 31 CFR 1024.210(b) that was inadvertently omitted in the final rule published in the Federal Register with an effective date of July 11, 2016, and an applicability date of May 11, 2018.

II. Description of the Technical Corrections

A. Correction to Appendix A to § 1010.230

This document makes technical corrections to Appendix A (Certification Form) to 31 CFR 1010.230. Appendix A inadvertently omitted the words “, Type,” after “Name” in the heading of Section II.b.^[1] Appendix A also included the term “foreign persons” in lieu of the term “non-U.S. persons” in several places and omitted the term “Social Security number” as described below. Because appendix A was originally Start Printed Page 45183 printed in the Federal Register from camera-ready copy rather than from typed text, the entire Appendix A, with the corrections, must be reprinted in the Federal Register from new camera-ready copy. As revised, appendix A (Certification Form) is identical to the original version except for the following: In the first sentence in Part I under the heading “What information do I have to provide?”, the term “foreign persons” is changed to “non-U.S. persons”; and in Part II: The heading of Section II b. is changed to “b. Name, Type, and Address of Legal Entity for Which the Account is Being Opened:”; and in the headings of the last column in the Tables in Section II c and Section II d, the term “Foreign Persons” is changed to “Non-U.S. Persons” and the term “Social Security Number” is added after the term “persons”; and in footnote 1, the term “Foreign Persons” is changed to “Non-U.S. Persons” and “a Social Security Number,” is inserted after the word “provide”.

B. Correction to § 1024.210

This document also makes a technical correction in 31 CFR 1024.210 by reinserting the training element of the AML program requirements for mutual funds, which was inadvertently omitted from the final rule. Consistent with 31 U.S.C. 5318(h)(1)(C) and the AML program requirements for mutual funds adopted in 2002,^[2] the training element appeared in the proposal amending the AML program requirements for mutual funds to add a new requirement relating to customer due diligence.^[3] In the final rule, however, the training element was inadvertently omitted from 31 CFR 1024.210(b). The training element is being reinserted by this correction document.

III. Administrative Procedure Act and Effective Date

Under 5 U.S.C. 553(b)(3)(B) of the Administrative Procedure Act (APA), an agency may, for good cause, find (and incorporate the finding and a brief statement of reasons therefore in the rules issued) that notice and public comment procedure thereon are impracticable, unnecessary, or contrary to the public interest. This correcting document reinserts language inadvertently omitted from the “Customer Due Diligence Requirements for Financial Institutions” final rule, specifically the training element in the AML program rule for mutual funds, and deletes a term and adds language that was inadvertently omitted from the Certification Form which accompanied the final rule. The agency has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment is unnecessary.

Under 5 U.S.C. 553(d)(3) of the APA, the required publication or service of a substantive rule shall be made not less than 30 days before its effective date, except, among other things, as provided by the agency for good cause found and published with the rule. FinCEN finds that there is good cause for shortened notice since the revisions made by this final rule are minor, non-substantive, and technical. This final rule takes effect September 28, 2017 with an applicability date of May 11, 2018.

IV. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) does not apply to a rulemaking where a general notice of proposed rulemaking is not required.^[4] As noted previously, FinCEN has determined that it is unnecessary to publish a notice of proposed rulemaking for this final rule. Accordingly, the RFA's requirements relating to an initial and final regulatory flexibility analysis do not apply.

V. Executive Order 13563 and 12866

FinCEN has determined that Executive Orders 13563 and 12866 do not apply in this final rulemaking.

VI. Paperwork Reduction Act Notices

There are no collection of information requirements in this final rule.

VII. Unfunded Mandates Act of 1995 Statement

Section 202 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1532 (Unfunded Mandates Act), requires that an agency must prepare a budgetary impact statement before promulgating any rule likely to result in a Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year. If a budgetary impact statement is required, section 205 of the Unfunded Mandates Act also requires an agency to identify and consider a reasonable number of regulatory alternatives before promulgating a rule. FinCEN has determined that no portion of this final rule will result in expenditures by State, local, and tribal governments, or by the private sector, of $100 million or more in any one year. Accordingly, this final rule is not subject to section 202 of the Unfunded Mandates Act.

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• Administrative practice and procedure
• Banks
• Banking
• Brokers
• Counter money laundering
• Counter-terrorism
• Currency
• Foreign banking
• Reporting and recordkeeping requirement
• Securities
• Terrorism

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Authority and Issuance

For the reasons set forth in the preamble, chapter X of title 31 of the Code of Federal Regulations is amended as follows:

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1. The authority citation for part 1010 continues to read as follows:

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Authority: 12 U.S.C. 1829b and 1951–1959; 31 U.S.C. 5311–5314 and 5316–5332; title III, sec. 314 Pub. L. 107–56, 115 Stat. 307; sec. 701, Pub. L. 114–74, 129 Stat. 599.

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2. In § 1010.230, revise appendix A to read as follows:

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3. The authority citation for part 1024 continues to read as follows:

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Authority: 12 U.S.C. 1829b and 1951–1959; 31 U.S.C. 5311–5314 and 5316–5332; title III, sec. 314 Pub. L. 107–56, 115 Stat. 307; sec. 701, Pub. L. 114–74, 129 Stat. 599.

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4. In § 1024.210:

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a. Redesignate paragraph (b)(4) as paragraph (b)(5);

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b. In newly redesignated paragraph (b)(5)(ii), remove the words “paragraph (b)(4)(ii)” and add in their place the words “paragraph (b)(5)(ii)”; and

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c. Add a new paragraph (b)(4).

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The addition reads as follows:

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