What is the FinCEN CDD Rule?

31 CFR 1010.230 requires identifying and verifying beneficial owners, understanding customer relationships, and ongoing monitoring.

What are the beneficial ownership thresholds?

Ownership prong: any individual owning 25%+. Control prong: one individual with significant managerial control.

When did the CDD Rule become effective?

May 11, 2018. Financial institutions must comply as part of their AML program.

Does the CDD Rule require sanctions screening?

Yes. Identified beneficial owners must be screened against OFAC SDN as part of customer due diligence.

By SanctionsAI team · Updated 2026-08-09

FinCEN Customer Due Diligence Rule (31 CFR 1010.230)

The FinCEN CDD Rule, effective May 2018, requires financial institutions to identify and verify beneficial owners of legal entity customers, understand customer relationships, and monitor for suspicious activity.

Four core requirements

Requirement	Description
Customer identification and verification	Verify the identity of each customer
Beneficial ownership identification	Identify any individual owning 25%+ and one control person
Understanding customer relationships	Develop a customer risk profile
Ongoing monitoring	Monitor for suspicious activity and update customer information

Beneficial ownership prongs

Ownership prong: Every individual who owns 25% or more of the equity interests of a legal entity. Control prong: A single individual with significant managerial control (CEO, CFO, managing member).

Sanctions connection: Each identified beneficial owner must be screened against OFAC SDN. Use SanctionsAI API for automated screening.

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Frequently Asked Questions

What is the FinCEN CDD Rule?: 31 CFR 1010.230 requires identifying and verifying beneficial owners, understanding customer relationships, and ongoing monitoring.
What are the beneficial ownership thresholds?: Ownership prong: any individual owning 25%+. Control prong: one individual with significant managerial control.
When did the CDD Rule become effective?: May 11, 2018. Financial institutions must comply as part of their AML program.
Does the CDD Rule require sanctions screening?: Yes. Identified beneficial owners must be screened against OFAC SDN as part of customer due diligence.

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