May’s Days See CDD And GDPR Take Effect

May 11 marked a watershed moment of sorts when, this past Friday, the final customer due diligence rule via the Financial Crimes Enforcement Network (FinCEN) took effect.

The rule, of course, amended Bank Secrecy Act regulations in ways that seek to enhance transparency in reporting of ownership of legal entities. Specifically, the rules look to blunt money laundering and terrorist funding activities.

FinCEN has said that the beneficial owner is someone who owns 25 percent or more of a legal entity, or has a significant role in overseeing day-to-day operations.

Additionally, in the United States, a labor battle at the CFPB may loom. The union that represents the employees has said that if acting head Mick Mulvaney moves to restructure with job cuts, the agency will take action. The union has also said that it will counter efforts that could “undercut” the CFPB’s mission to do its job. In recent weeks, the union had short-circuited plans to shift agency functions, such as moving fair lending operations out of the division of supervision and enforcement.

Internationally Speaking…

Beyond domestic regulations, and yet still impacting the United States, Europe’s General Data Protection Regulation (GDPR) comes into effect later in the month. And yet, as reported this past week, the regulators may not be up to doing the regulating.

According to Reuters, 17 of 24 regulatory authorities said they may not yet have the funding or powers they need to enforce the mandates of GDPR. Some respondents are in the midst of asking their respective governments for more money or regulatory leeway. Laws have yet to be updated to the point that they extend across Europe. The procurement of funding and legal discretion may take months, and yet the new rules will become official on May 25. At the moment, the strategy that is in place relies on reacting to complaints that come in the aftermath.

Elsewhere in Europe, the U.K.’s Financial Conduct Authority (FCA) is being criticized by former small business owners for how it handled their complaints about large banks. Reuters reported that in response to the Treasury Committee, the former business owners alleged that the FCA had been “unable to handle” complaints against those large FIs. As previously reported, the FCA has been examined by lawmakers amid allegations that RBS had helped to force thousands of smaller (and struggling) U.K. firms into bankruptcy.

Down under, the Australian government is looking to cut some funding flows to its own country’s corporate regulator, despite the fact that the Australian Securities and Investment Commission (ASIC) has said its effectiveness is already limited. Reuters has reported that the funding cuts could total as much as 8 percent over the next four years.

Thomas Clarke, a professor at the University of Technology at Sydney’s business school, told the newswire that “These cuts are not large cuts, but they’re significant to the public’s mind, and they’re significant for the morale and strength of resolve of the regulators concerned.”