In July of 2014, the Financial Crimes Enforcement Network (a bureau of the US Treasury) proposed new requirements that would make it mandatory for all financial firms to assess beneficial owners.

The proposal put forward by FinCEN would mandate firms to “identify and validate the identities of the individuals and/or entities that have a controlling interest from the account or the assets in the account”

Due Diligence - AML KYC

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Individuals or legal entities (i.e., corporations) that benefit from, or that have controlling rights over an account are considered to be beneficial owners. The beneficial owners may sometimes be different from the person or entity opening the account.

During the customer due diligence phase, financial firms are recommended to assess the beneficial owners of an account before opening the account.

However, due to the complex nature of assessing beneficial owners, most firms only do this when performing enhanced due diligence.

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