- What is the beneficial ownership rule?
- Who is a beneficial owner?
- Who is a legal entity customer?
- What changed? Why are you asking for this extra information now, you’ve never asked for this before?
- What information do you need and for whom?
- Is every bank and financial institution required to gather this information now?
- What do I do if this information changes?
- When am I required to notify you of a change and where or how do I send it?
- Why is this information being gathered and who will receive it?
To help the government fight financial crime, federal regulation requires financial institutions to obtain, verify, and record information about the beneficial owners of legal entity customers.
Beneficial owners are defined two ways: as individuals who own 25% or more of the equity interests of a legal entity customer, and individuals who have significant responsibility to control, manage, or direct a legal entity customer (Chief Financial Officer, Vice President, Treasurer).
A legal entity customer is an entity such as a corporation, limited liability company, or other entity that is created by the filing of a public document with a Secretary of State or similar office, a general partnership, and any similar entity formed under the laws of a foreign jurisdiction that opens an account.
What changed? Why are you asking for this extra information now, you’ve never asked for this before?
The U.S. government published the new Customer Due Diligence rule in May 2016. The rule took effect July 11, 2016 with mandatory implementation by May 11, 2018. This rule is to help the government fight financial crime. Legal entities can be abused to disguise involvement in terrorist financing, money laundering, tax evasion, corruption, fraud and other financial crimes. Obtaining this information helps law enforcement investigate and prosecute these crimes.
A beneficial owner who owns 25% or greater of a legal entity will need to provide their name, address, date of birth and social security number. The beneficial owner will also need to provide a copy of a driver’s license or passport. Additionally a control person who has significant responsibility for managing the legal entity will also need to provide this information. All of this data will be captured on the Certification of Beneficial Owners of Legal Entities form. The natural person opening the account will sign the form certifying the information is correct. The beneficial owners DO NOT need to be present.
Yes, mandatory compliance with the new rule is May 11, 2018.
You will need to inform the bank and update the Certification of Beneficial Owners of Legal Entities form.
The bank should be notified soon after a change in beneficial ownership takes place.
This information is being gathered to comply with the U.S. Government’s Customer Due Diligence rule. The information will be received and electronically stored at the bank.