In the wake of the release of the “Panama papers,” the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has finalized new customer due-diligence (CDD) standards designed to ensure that banks, broker-dealers, mutual funds, futures commission merchants (FCMs), and introducing brokers in commodity transactions know their customers and ensure they are not engaging in criminal, terrorist, or corrupt activities before doing business with them. These institutions would also generally be required to know and verify the beneficial owner of a transactions’ proceeds, a challenge given the opacity of ownership structures in many financial centers around the world and several U.S. states. Anti-money laundering (AML) monitoring will also need to be enhanced at covered financial institutions despite FinCEN assertions that much in its final rule merely codifies functional-regulatory requirements.
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