What should a credit union do if they cannot verify a member's beneficial ownership identity?

When a credit union is unable to verify a member's beneficial ownership identity, the most appropriate course of action is to close the account after attempts have failed. This is in line with the principles of the Bank Secrecy Act (BSA) and the requirements for customer due diligence. Compliance with BSA regulations demands that financial institutions have a thorough understanding of their customers and maintain accurate records of the beneficial ownership of accounts.

If the credit union cannot successfully verify this information, it poses a risk of facilitating illicit activities such as money laundering or fraud, as undisclosed or unverified ownership can obstruct proper monitoring and reporting. Consequently, keeping the account open indefinitely would not mitigate this risk and could result in regulatory consequences for the institution.

While providing limited services may be a temporary measure for some compliance situations, it does not address the fundamental issue of insufficient verification. Notifying law enforcement is not necessary unless there is clear evidence of criminal activity; instead, the financial institution must take appropriate measures to mitigate their compliance risks. Therefore, closing the account after all reasonable attempts to verify beneficial ownership have failed is the correct approach to adhere to BSA compliance standards.