Effective May 11, 2018, a new federal regulation requires all federally regulated banks, credit unions and security brokers/dealers to obtain additional information whenever a deposit or loan account is opened for legal entities such as corporations, LLCs and general partnerships.
Under these new rules (often referred to as the Beneficial Ownership or Customer Due Diligence Rule), each time an account is opened for the above listed entities, identifying information such as name, address, date of birth, Social Security number and copy of driver license or passport will be required for beneficial owners.
The Rule defines beneficial owners as:
Beneficial Owner(s) must be a natural person, and cannot be another LLC or company, a nominee, or a straw man.
The bank is not required to conduct retroactive reviews to obtain beneficial ownership information from customers with accounts opened prior to May 11, 2018. However, if certain types of changes are made to existing account (e.g. change in signers, change of ownership structure, loan renewal or loan modification), beneficial ownership information will be required at that time if the bank does not have a current Beneficial Ownership Certification Form on file.
The control person identified must be a high-level official in the legal entity who is responsible for how the organization is run and who will have access to a range of information concerning the day-to-day operations of the company. Examples of the types of positions that could qualify include an executive officer or senior manager (e.g., a Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner, President, Vice President or Treasurer). This list of positions is illustrative, not exclusive.
Name, Date of Birth, Address and Social Security number (or other government identification number, such as a passport number) is required for each beneficial owner. The bank will also request your company’s organizational documents.
For purposes of Beneficial Ownership, a Legal Entity is defined as a corporation, limited liability company, general partnership, limited partnership or other type of entity, including business trusts, that are created by the filing of a public document with a Secretary of State or similar office.
A Legal Entity customer does not include sole proprietorships, unincorporated associations or natural persons opening accounts on their own behalf.
Yes. The Rule excludes from the definition of Legal Entity customer certain entities that are subject to Federal or State regulation and for which information about their beneficial ownership and management is available from the Federal or State agencies, such as:
Incorporated non-profits, like 501(c)3 organizations, as well as any organization that is created by the filing of a public document with a Secretary of State or similar office, are considered to be Legal Entities and will be asked to provide the name of one individual with significant responsibility to control, manage or direct the organization. (Examples include an executive officer or senior manager, CEO, CFO, COO, president, vice president, treasurer, etc.)
The individual seeking to open a new deposit, loan or safe deposit account (or make changes to an existing account) on behalf of the Legal Entity customer will be asked to provide the Beneficial Ownership information. This individual could, but would not necessarily, be a Beneficial Owner. This individual must sign a Certification Form stating that to the best of his or her knowledge, the information on the Form is complete and correct.
If there are no owners with 25% or more ownership, then identifying information will only be required of one person who controls or manages the organization.
Each time a new account is opened or a certain type of change is made to an existing account, Beneficial Ownership information will be required unless the bank has a current Beneficial Ownership Certification Form on file.