Category Archives: ALI Principles of Compliance, Risk Management and Enforcement

FinCEN Releases Frequently Asked Questions Regarding Customer Due Diligence and Beneficial Ownership Requirements

by David S. Cohen, Franca Harris Gutierrez, Sharon Cohen Levin, Jeremy Dresner and Michael Romais

Last week the Financial Crimes Enforcement Network (FinCEN) issued much-anticipated Frequently Asked Questions (PDF: 387 KB) (FAQs) that provide additional guidance to financial institutions relating to the implementation of the new Customer Due Diligence Rule (CDD Rule), set to go into effect on May 11, 2018.[1] In general, the FAQs clarify certain issues that have caused implementation challenges for financial institutions. While FinCEN’s earlier guidance provided a general overview of the CDD Rule—including the purpose of the rule, the institutions to which it is applicable, and some relevant definitions—the new FAQs provide greater detail for financial institutions seeking to comply with the CDD Rule. The FAQs are meant to assist covered financial institutions in understanding the scope of their customer due diligence (CDD) obligations, as well as the rule’s impact on their broader anti-money laundering (AML) compliance. While the guidance is helpful in clarifying some of FinCEN’s expectations, the implementation challenge lies in applying the CDD Rule to a financial institution’s specific products and services.

As financial institutions work to meet the CDD Rule’s fast-approaching May 11 compliance deadline, they should pay special attention to the following key areas summarized below. Continue reading

Response to Professor Sepinwall’s Article on Sentencing Reforms

by Lee S. Richards

In a recent post to this blog, Professor Amy Sepinwall made a startling argument.  Reflecting on the debate between liberals and conservatives over the Sentencing Reform and Corrections Act of 2016, she strongly suggested that the Act’s strengthening of the mens rea element in criminal cases should be limited to the disadvantaged and not extended to “the already advantaged.”  She applauded the proposed bill for providing “deserved fairness for the disadvantaged,” but appeared to lament the fact that a more stringent mens rea requirement under that bill would be available for “some senior corporate management ‘fat cats,’” as well.  This position is consistent with her defense of the “responsible corporate officer” doctrine, which does away with any mens rea requirement in certain cases against high level corporate officers. Continue reading