In May 2016, the Financial Crimes Enforcement Network (FinCEN), under the Bank Secrecy Act passed a new rule regarding the beneficial ownership of legal entity customers. Going forward, it will be mandatory for all covered financial institutions to comply with this rule by identifying the ultimate beneficial owner(s) and a controlling person of a legal entity customer opening or when changes are made to an existing relationship (e.g. deposit, loan or safe deposit box).
Any time an account is opened or changes are made to an existing relationship for a legal entity, Honor Bank will request information that identifies the ultimate beneficial owner(s) and controlling person of the legal entity. The required identifying information includes name, address, date of birth, social security number (or passport number or other similar information, in the case of foreign persons), and other information that will help identify those individuals. This information will need to be collected whether or not the person identified is an Honor Bank customer.
While we understand the information requested is personal and sensitive, we need to obtain this information in order to comply with the law. As always, we will treat all information collected with the utmost care. All information will be stored securely and handled with the same standard of privacy that we have always maintained.
What you need to know about Beneficial Ownership
- The new rule impacts all legal entities opening accounts, and when changes are made to an existing relationship at any financial institution.
- Legal entities will need to identify and attest to all ultimate beneficial owner(s) that meet specific requirements as well as a controlling person (e.g., Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner, President, Vice President or Treasurer).
- Honor Bank will collect information regarding the ultimate beneficial owner(s) and control person of legal entities whether or not they have a personal relationship with the Bank.
Information you will need to provide
- Address (Residential or Business Street Address)
- Date of Birth
- Social Security Number (or passport number or other similar information, in the case of foreign persons)
Q: Does this regulation apply to existing business accounts?
A: If certain types of changes are made to existing accounts (e.g. change in beneficial ownership since last certifying for your organization, change in authorized signers, or another triggering event), identifying information and organizational documents related to Beneficial Ownership will be required at the time of change.
Q: Who is considered a Legal Entity?
A: 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, as well as similar entities formed under the laws of a foreign jurisdiction.
A Legal Entity customer does not include sole proprietorships, unincorporated associations, or natural persons opening accounts on their own behalf. This listing is illustrative, not exclusive.
Q: What about Associations and Non-Profits; are they also Legal Entities?
A: Incorporated non-profits, 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. Only the "control" information is required (e.g. 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.)
Unincorporated associations do not fall under the legal entity definition, and are not required to provide Beneficial Ownership information.
Q: Who is the Beneficial Owner and Controlling Person?
A: The FinCEN rule defines a Beneficial Owner as each of the following:
- Each individual who directly or indirectly owns 25% or more of the equity interests of a Legal Entity customer.
- A single individual with significant responsibility to control, manage, or direct a Legal Entity customer, including an executive officer or senior manager (e.g., a CEO, CFO, COO, managing member, partner, president, vice president, treasurer, etc.) or any other individual who regularly performs similar functions.
Beneficial Owner(s) must be a natural person, and cannot be another LLC or company.
Q: What types of individuals satisfy the definition of a person with “significant responsibility to manage, direct or control a legal entity customer?”
A: The control person identified is a single individual with significant responsibility to control, manage, or direct a legal
entity customer. 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.
Q: What types of identifying information is required?
A: The Name, Date of Birth, Address, and Social Security Number (or passport number or other similar information, in the case of foreign persons) is required for each individual who owns 25% or more of the equity interest of the Legal Entity. This same information is required for an individual with significant responsibility to control/manage the Legal Entity. The bank will also request your company’s organizational documents. A residential or business street address, or if the individual does not have such an address, an Army Post Office (APO) or Fleet Post Office (FPO) box number.
Q: What if no one owns 25% or more of the Legal Entity?
A: If there are no owners with 25% or more ownership, then identifying information will only be required on one person who controls or manages the Legal Entity.
Q: How frequently will identifying information be requested?
A: Each time a new account is opened, or when changes are made to an existing relationship, Beneficial Ownership information will be required.
Q: What if the beneficial owner(s) is not available to appear in person at the bank.
A: The bank can provide a Beneficial Ownership Certification Form to collect the beneficial owners identifying information. We accept a photocopy or other reproduction of the documents used to verify your identity.