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New FiNCEN beneficial ownership requirements for legal entity customers effective May 2018

Effective May 11, 2018, new provisions of the Bank Secrecy Act (BSA) requires that all financial institutions, including banks, must enhance their due diligence practices when opening new accounts for legal entity customers to assist the government's fight against crimes that evade banking measures that address terrorism and national security threats.

Each time an account is opened for a covered legal entity, we are required to ask you for specific identifying information such as, name, address, date-of-birth, Social Security number, and supporting identifying documents. 

Why are the regulations changing?

In an ongoing effort to protect and maintain the security of our country, these enhanced regulations are aimed at preventing financial crimes conducted through accounts created and operated anonymously. The information collected under the new regulations, will assist financial institutions in assessing risks when opening new accounts, as well as help prevent intentionally evasive organizations from financing terrorism and other criminal activity.

What is a legal entity?

A legal entity customer is defined as one of the following: 

  1. Corporation
  2. Limited liability company (LLC)
  3. General partnership (GP)
  4. Business Trusts
  5. any other entity created by filing a public document with the Secretary of State or similar office. 

This does NOT include the following:

  1. Sole Proprietorships
  2. Unincorporated Associations
  3. Estate-Planning Trusts
  4. Natural Persons opening personal accounts on their own behalf.

Identifying beneficial owners.

Under the new provisions, we are required to conduct due diligence procedures to IDENTIFY the beneficial owners of legal entities and VERIFY the identity of each beneficial owner identified. Beneficial owners can be the following: 

OWNERSHIP: each individual who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, owns 25% or more of the equity interests of a legal entity customer. *It is important to note that it is possible to have an owner identified who may not necessarily be a signer on the account.

CONTROLLER: at least one individual with a significant responsibility to control, manage, or direct a legal entity customer.  

What if no one owns 25% or more of the legal entity? 

You will still need to provide the information of at least one person who has significant managerial control of the entity. For example, a President, CEO, CFO, COO, Managing Member, or Controller. 

How to identify beneficial owners? 

Each owner that owns 25% or more of the legal entity and/or the controller must present two forms of identification at account opening; legal entities must also comply. Acceptable forms of ID provided below: 

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