Beginning on May 11, 2018, The Financial Crimes Enforcement Network (FinCEN) will require all financial institutions to obtain information from business customers on who has Beneficial Ownership interest in their organization.
The purpose behind the rule is to help our government safeguard the financial system from illicit use and fight financial crimes such as money laundering by collecting beneficial ownership information at account opening.
“To comply with this law, your bank will be asking the person that opens your new business account, or is responsible for the management of your existing business account, to complete a certification form. Typically, the certification form is completed in person at the business location, the bank, or a title company in the case of a loan closing. It’s a brief 2-page form which can be completed in just a few minutes,” says Mary Schuh, Leaders Bank VP Operations/BSA Officer.
- What qualifies as an account? An account is a formal banking relationship established to provide or engage in services, dealings, or other financial transactions. Examples include deposit accounts, transaction or asset accounts, and loans. Loan renewals and other changes in terms qualify as new accounts under the rule--the certification form will need to be completed again with the new information.
- Banks are required to obtain beneficial ownership from legal entity customers. Who is that?
|Legal Entities||Entities Not Covered|
Other entities established by filing
a public document with the Secretary
of State or other similar office
| Sole Proprietorships
Department or agency of the United States
Entities listed on the NYSE or NASDAQ
Natural persons (individuals) opening an
account on their own behalf
The certification form will ask for the name, address, date of birth, and social security number for the beneficial owners of the company. This includes:
- Any individual who directly or indirectly owns 25% or more of the equity interests of the legal entity, and
- One individual with significant responsibility for managing the legal entity, such as a CEO, COO, President, etc.
While some companies may not have any owners with 25% or more ownership interest (under #1), all companies must provide information on an individual with significant managerial control (under #2). It is also possible that the same name could be listed in both sections.
Your financial institution will require a copy of the driver’s license or other identifying document for each person listed on the form. A retail bank representative or loan officer can usually answer any questions about completing the form.