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New 'know your customer' rules proposed for banks

Published July 30, 2014 5:14 pm

Regulations • Treasury Department's goal is to prevent the laundering of illicit profits.
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Washington • The U.S. government is proposing new rules for banks and other financial firms aimed at preventing the use of anonymous companies to launder illicit profits.

The Treasury Department opened the proposal Wednesday to public comment for 60 days. The so-called "know your customer" rules would add a requirement that financial firms know and verify the identities of the people who control companies, known as beneficial owners.

Under current rules financial firms are required to report suspicious transactions to authorities in order to prevent the financial system from being used to launder proceeds from illegal activities or for financing terrorism.

Treasury said the new proposal is in line with principles adopted by the eight major industrial countries to fight tax evasion, bribery and money laundering.

The new rules would make the financial system more transparent, Treasury said in a news release.

The rules apply to banks, brokerage firms, mutual funds and brokers who trade commodities.

Several high-profile cases involving big banks in recent years have exposed lax controls that allowed drug traffickers, arms dealers or terrorist groups to launder money by passing it through bank accounts to disguise the illegal activity.




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