Community Bankers and the New CDD Rule

The goal of the Community Banking Corner is to provide useful tips for Bank Secrecy Act/anti-money laundering (BSA/AML) professionals in community banks to help them in their day-to-day jobs. This section will focus on all aspects of BSA/AML from the effects of de-risking on smaller banks to efficiencies that can help BSA/AML professionals in community banks. We plan to cover many topics in the ACAMS Today magazine and on

So, if you are a community banker with topic ideas you would like to discuss, please feel free to send them to

Community Bankers and the New Customer Due Diligence Beneficial Ownership Rule

Over the past year, banks have been preparing for the new customer due diligence (CDD) beneficial ownership rule, which should be implemented by May 2018.

From a community banker’s perspective, here are a few key points that stand out:

  • Specific attention has been paid to the beneficial ownership section of the rule. Although this is understandable since it is new to many community banks, it is important not to lose focus on other aspects of the regulation. It is especially important not to lose focus on the third and fourth parts of the regulation. Even though these items are not new to banks, they are now required and a review of current processes to update what is currently done may be necessary to ensure your bank is in compliance.
  • Vendor relationships are a critical component of this regulation. While many AML vendors are on track to assist AML teams in their compliance efforts, many of the pain points community banks are feeling pertain to the development and support from core vendors and platform account opening vendors. Bankers find that the vendors are either not ready or their systems do not easily fit into the bank’s process to comply with the regulation. It is important now more than ever to communicate with your banking peers and to share information to determine if system vendors in the financial sector have sufficient information. In addition, it is important to determine if they understand the needs banks have in order to comply with the regulation, with as little impact as possible to the process flow when opening and monitoring accounts.
  • Determining what constitutes a trigger event. There has been much discussion on what is a trigger event, which as per the regulation requires, “the obligation to update customer information as a result of monitoring would generally only be triggered when the financial institution becomes aware of information about the customer in the course of normal monitoring relevant to assessing the risk posed by a customer; it was not intended to impose a categorical requirement to update customer information on a continuous or ongoing basis using the Certification Form in Appendix A or by another means.”

    In my perspective, it is better to keep it simple and not have 20 to 30 documented items that are trigger events. Have a simple list of items, which prompt the bank to determine if the event or customer activity prompts an update to their risk profile.

  • One of the biggest pain points is that updates to the FFIEC BSA/AML Examination Manual, detailing examiner requirements, have not been published as of yet and may not be out until late 2017 or early 2018. This puts those of us attempting to implement this regulation in the middle of a guessing game. While bankers are working to implement the requirements, they also hope their interpretations are closely aligned with the expectations of examination requirements.

Finally, one of the most important pieces of advice I tell other bankers is to try and think of this as a positive. With the new regulation you have a great opportunity to strengthen your institution’s know your customer/CDD program, which is the backbone of a strong BSA/AML program. So, think about how you can accomplish this and implement strong changes to help your program become stronger.

Robert J. Soniat, CAMS-FCI, vice president—BSA/AML officer, Union Bank and Trust, Glen Allen, VA, USA,

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