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Beneficial Ownership Information FAQ

Beginning on May 11, 2018, all financial institutions will be subject to a new rule under the Bank Secrecy Act intended to assist the government in the ongoing fight against money laundering and the financing of terrorism. When an account is opened on behalf of a business, or covered “legal entity”, we will be required to ask you for certain identifying information of the “beneficial owners” of the business. Please review the Frequently Asked Questions (FAQs) below that we've created to assist our customers with understanding the new requirements.

Question: Do the new requirements apply to all financial institutions?

Yes, all banks, savings associations and credit unions will be covered by the regulations requiring Certifications for this type of information.

Question: Who does the Rule apply to, and what is a covered “legal entity”?

Answer: The Rule applies to covered “legal entities” which are organizations such as corporations, partnerships, limited liability companies and business trusts.

Question: Are any legal entities exempt from the Rule?

Answer: A “legal entity” customer does not include sole proprietorships, unincorporated associations, natural persons opening account on their own behalf and certain trusts.

Question: Who is a beneficial owner?

Answer: A beneficial owner(s) must be a natural person (not a LLC or other business):

  • Who Owns the Legal Entity – Each individual, if any, who, directly or indirectly owns 25% or more of the equity interest of a legal entity; and
  • Who Controls the Legal Entity - A single individual with significant responsibility to control, manage, or direct a legal entity, including an executive officer or senior manager. Some examples of a controlling individual may be a Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner, President, Vice President, or Treasurer.
  • Question: Is it possible that I am both the person that owns and controls an entity?

    Yes, it is possible that in some circumstances the same individual might be identified under both sections (The President of ABC, Inc. who also holds a 30% equity interest).

    Question: Why do I have to get information on the owners of my organization?

    Answer: The federal government has issued regulations requiring that before deposit, lending or safe deposit accounts can be opened for a covered entity, information must be collected about the owners of those organizations.

    Question: What information do I have to provide?

    Answer: If you want to open an account for a covered entity, a person with signing authority will have to sign a Certification that gives the following information:

  • Names
  • Addresses
  • Dates of Birth and
  • Identifying numbers (such as Social Security Numbers)
  • For any owners that have 25% or more in ownership, as well as for one person who controls the organization. The financial institution will also have to verify that information.

    So, it may be necessary for you to get that information, put it on the form, and then bring the form along with copies of verifying documents (such as copies of the owners’ drivers licenses) back to the financial institution. An authorized signor will then need to sign the Certification on behalf of your organization.

    Question: How will this information be collected?

    Answer: A Certification form will be used to obtain the required beneficial ownership information. View a sample Certification form by clicking here.

    Question: What does signing the Certification mean?

    Answer: Signing the Certification means that the person signing is stating that to the best of his or her knowledge, the information on the form is complete and correct.

    Question: What if no one owns 25% or more of the organization?

    Answer: If there are no owners with 25% or more ownership, either because all of the owners own a smaller percentage or because it is a nonprofit organization that has no owners, then you will just need the information on one person who controls or manages the organization which should be entered in the Control part of the form.

    It is important to note that the information that goes on the Certification must be information regarding people rather than another organization. If another organization is the owner, then the information on the natural person(s) who own that other organization must be provided.

    Here are some examples of how this form should be completed in certain circumstances:

  • If there are four owners, each owning 25% then information on all four owners should be entered in the Ownership section of the Certification, and information on one person in control of the entity should be entered in the Control section.
  • If there are two owners of 40% and one owner of the remaining 20%, then information on the two 40% owners should be entered in the Ownership section of the Certification, nothing needs to be entered for the 20% owner, and information on one person in control of the entity should be entered in the Control section.
  • If there are five owners of 20% each, then no information needs to be listed on any of those owners in the Ownership section of the Certification and it should be indicated as “not applicable” on the form. However, information on one person in control of the entity should be entered in the Control section.
  • If your organization is a nonprofit entity, and does not have any owners, there will be no owners to list in the Ownership section of the Certification and it should be indicated as “not applicable” on the form. However, information on one person in control of the entity should be entered in the Control section.
  • Question: Does this information have to be kept confidential?

    Answer: Yes, financial institutions are subject to privacy and information security requirements that cover this information.

    Question: I am an existing customer. Does the Rule apply to me?

    Answer: The Rule does not apply to existing accounts that were opened before the Rule was effective. However, if you open a new account with us for a covered legal entity, we will need to obtain a signed Certification form from you. Additionally, for certificates of deposit or loans that are renewing to covered legal entities, the bank is required to collect verification information.

    Question: Does completion of the Certification need to be done just once?

    Answer: No, the Certification is required every time you open another new Account. The definition of Account includes opening any new loans, deposit accounts and/or safe deposit relationships. However, it does not include single transactions like check-cashing or sales of treasurer’s checks.


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