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Your Customer Due Diligence Program – Time to Fill in the Gaps

With the beneficial ownership rule deadline right around the corner, we’ll spend some time camping on Customer Due Diligence Program elements. We’ve all been required to know our customers for quite some time now, and that we need to have a good understanding of how customers are going to act, initially and ongoing.

What will this series entail? Read on…

Customer due diligence policies and procedures

Across the industry, customer due diligence is now considered the fifth element of a Bank Secrecy Act (BSA) program. We’ll take a look at how your customer due diligence policies and procedures should align with your BSA program and BSA risk assessment. And, equally important, do your policies and procedures mirror what you do?

Customer Identification Program (CIP)

While nothing new to this area, we’ll spend a brief moment reviewing the requirements, just to be sure there are no gaps in your process.

Customer relationship risk profile or assessment

A crucial building block to your customer due diligence program is identifying, measuring, and monitoring the risk(s) each customer relationship brings to your organization.  Have you developed an initial risk profile? Do you know when to update it and what triggers a review? Do you have a good understanding of key risk areas to identify and measure? This process is ongoing and with some customers, constantly evolving.

Standard due diligence

We’ll explore three key ingredients to this process: coverage, application and process. Without these, the end result will not be what’s required by regulators.

Beneficial ownership

The newest piece to this puzzle – are you getting ready? Some of the key highlights we’ll discuss are BSA program integration, definitions, coverage, timing, identification, certification, and verification. A few scenarios will be included to test your knowledge of the requirements. Also thrown into the mix is an important question for you to consider: when should you involve your board?

Enhanced due diligence and due diligence monitoring

Closely linked to that customer risk profile, the enhanced due diligence process is ongoing and fluid. We’ll focus our discussion on the risk-based approach to this process as well as ensuring that, because of the beneficial ownership rule, it is formalized and enhanced. We can’t forget to mention the process or method by which you monitor customer activity and how it rolls into other BSA activities, such as suspicious activity reporting.

Stick around – we look forward to helping move your BSA program from good to great!


Around the Industry:

Effective Now:

CFPB releases HMDA information about penalty assessments for errors in data collected during 2018.

CPFB updates the TILA-RESPA Integrated Disclosure Guide to the Loan Estimate and Closing Disclosure forms. The updated guide incorporates amendments and clarifications in the CFPB’s July 7, 2017 final rule amending the TRID requirements.

Share with your customers the CFPB’s blog on financial New Year’s resolutions.

On the Horizon:

Recently, the CFPB published the launch of a HMDA Check Digit Tool and Rate Spread Calculator to assist with compliance of the 2018 HMDA rule.


Closely linked to HMDA, how’s your fair lending program measuring up? Read this to find out.


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