CDD Rule

The FinCEN Customer Due Diligence (CDD) Rule (31 CFR § 1010.230, effective May 2018) requires covered financial institutions — banks, brokers, mutual funds — to identify and verify the beneficial owners of legal entity customers. A beneficial owner is defined as any individual owning 25%+ of the equity interests, plus one individual with significant management control. The CDD Rule is the US equivalent of EU KYB/UBO requirements. It was the precursor to the Corporate Transparency Act and remains the standard for financial institution onboarding.

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