NCUA has said it plans to include CDD in its exams beginning July 1 for the rule that went into effect in May of this year.

WASHINGTON–Credit unions should now be prepared for their examinations to include compliance with “customer due diligence” (CDD) requirements.

NCUA has said it plans to include CDD in its exams beginning July 1 for the rule that went into effect in May of this year.

Under the rule, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has listed four core elements of CDD that it said should be “explicit requirements in the anti-money laundering (AML) program for all covered financial institutions, in order to ensure clarity and consistency across sectors.”

The 4 Elements

These four elements are:

1. Customer identification and verification
2. Beneficial ownership identification and verification
3. Understanding the nature and purpose of customer relationships to develop a customer risk profile
4. Ongoing monitoring for reporting suspicious transactions and, on a risk-basis, maintaining and updating customer information

The first of these elements was already an AML program requirement, the agency said when it issued the rule, and the 2016 rule addressed the second. “The third and fourth elements are already implicitly required for covered financial institutions to comply with their suspicious activity reporting requirements,” FinCEN said in a statement.

In May, FinCEN did announce a 90-day “exceptive relief” for the second core element on “beneficial ownership.”