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Treasury issues rule requiring financial institutions to identify shell company owners

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Treasury issues rule requiring financial institutions to identify shell company owners

TheU.S. Department of the Treasury issued a customer due diligence final rulerequiring the financial industry to identify, verify and collect information onthe beneficial owners of companies opening accounts, among other things.

Thecustomer due diligence rule covers banks, brokers, mutual funds, and variousfinancial institutions, according to a news release. Banks andother financial institutions will have two years to prepare systems forcompliance.

Thefinancial industry is also obligated to conduct continuous monitoring toidentify suspicious transactions and maintain updated customer information.According to the final rule, financial institutions will have to collectinformation on individuals who own 25% or more of the a legal entity with an account,including the individual who controls the company.

Inconnection with this specific requirement, the Treasury proposed legislationobligating financial institutions to report the identity of beneficial ownerswhen a company is incorporated. The information would then be made available tolaw enforcement.

TheDepartment of Justice is also proposing legislation, seeking to broaden itspowers in investigating and prosecuting transnational corruption cases.