Beneficial Ownership Changes

Use New CDD and Beneficial Ownership Requirements as a Win-Win for Your Institution

The final Customer Due Diligence (CDD) rule didn’t come as a shock, but that doesn’t mean that we are all ready to put Beneficial Ownership changes in place. Over the years, implementation of regulatory changes usually ends with the same underlying results:

  • Added Front Line Pressure–  The Front Line is responsible to collect more information from unwilling customers for other departments of the institution that doesn’t pertain to them
  • Added Back Office Pressure– The Back Office has the responsibly to make sure that the Front Line collects the new required information that they need to do their job successfully

Isn’t it time for implementation practices to evolve into beneficial structure for an institution instead of stress? The Beneficial Ownership changes that need to take place create the perfect opportunity for institutions to turn added pressures into efficiencies that can be a “Win-Win” for the institution as a whole. Instead of adding to existing procedures for regulation changes, let’s rethink them.

Secure a Sales and Service Win

The requirements in FinCEN’s final CDD ruling touch every corner of the institution that works with, or supports your customer or member base. So, wouldn’t it make sense to find a solution that can benefit all areas of your institution?

Front Line Goals – Increase Sales and Retention:

Front line staff is driven by sales and service, which means gaining new business while cross-selling to retain and grow existing relationships. In support of those initiatives marketing departments strive to get more people in the door and to adopt more lucrative products and services.

The better the Front Line understands the nature purpose of the customer’s financial relationship, the better equipped they are to sell the right products and services to drive customer satisfaction and retention, which ultimately means profit.

Back Office Goals – Protect the Institution and Pass the Exam!

Compliance professionals are driven by, well, compliance… They are the ones in the hot seat when the examiners come calling. Many Compliance Professionals are in it to ‘catch the bad guys’ but all of them share a desire to protect their institution.

The better the Back Office understands the nature and purpose of the customer’ financial relationship, the better equipped they are to develop risk profiles needed to protect the institution from a bad exam, which can lead to Operational, Legal, and Reputation Risk.

Align Goals for the Front and Back Office

All areas have a vested interest in knowing and understanding customer relationships, so take this opportunity to collaborate with the Retail, Lending, Marketing and Training departments. You now have the ability to turn uncomfortable, required questions into friendly conversation starters that drive sales. Asking better questions instead of just more questions improves the customer experience, and increases the likelihood that you’ll get the required information.

For an added bonus, separate your questions into Customer level and Account level, that way at subsequent visits, your front line only has to verify the existing information, and ask the few account-specific questions that are needed. This saves time, shows that you already know your customer, and uncovers changes that can lead to any number of cross sale opportunities, that will ultimately benefit the customer AND the institution.


Secure Efficiency Wins Between Departments

As you prepare to update your policies and procedures to incorporate the CDD/Beneficial Ownership changes, take some time to think through your the key touch points customer/member lifecycle…

  • Initial Data Collection
  • On-boarding review and risk rating
  • Managing periodic reviews
  • Information Management

Here are some key points to consider if you opt to do a full review of these areas, our Beneficial Ownership page can provide additional resources. We suggest using the new rule as an opportunity to fully review your processes, but even a cursory review of your on-boarding processes across the institution will likely show process overlaps and duplication of effort.

  1. Organic GrowthAre you planning on expanding your footprint or your product offerings?
  2. Inorganic Growth: Are there any mergers or acquisitions in your future?
  3. Institution-Wide ProductivityWhat about as you factor in Beneficial Ownership changes around the collection, usage, storage and retention of information and certifications institution-wide?
  4. Additional StaffingWill you be able to add staff to cover the additional work?

If the answers to any of these questions make you pause, consider what resources could be freed up by the following process improvements:

  • End duplication of effort around data collection and data entry
  • Centralize data between departments for usage and retention
  • Assign work in a manner that best fits your staffs’ strengths
  • Set and track review schedules, from onboarding to periodic risk reviews
  • Streamline reporting for audits and exams

Incorporating even small changes now can make a huge difference, providing efficiency ‘wins’ in multiple areas within your organization. Remember, FinCEN’s final ruling touches every customer/member facing and/or servicing area within the institution, meaning you don’t have to do all of this on your own! Each area has a vested interest in a successful implementation of the newest compliance requirements, providing a great opportunity for collaboration and buy-in. Turn the implementation of CDD/Beneficial Ownership changes into a Win-Win solution!


Debra Eshbaugh, CAMS

Senior Product Manager, Banker’s Toolbox

Debra came to Banker’s Toolbox with 30 years of experience in the financial institution industry. She worked extensively with retail banking and lending before moving to bank operations. There she managed several areas including deposit processing, proof, ATM/cards, retail & commercial cash vaults and armored transport. She joined the Banker’s Toolbox product department in 2010. As the Product Manager over the BAM BSA Suite of products, Debra is responsible for managing new product development, including our new Beneficial Ownership solution, Due Diligence Manager.