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For Your Knowledge: Beneficial Ownership Q&A
To help the government fight financial crime, Federal regulation requires certain financial institutions to obtain, verify, and record information about the beneficial owners of legal entity customers. Legal entities can be abused to disguise involvement in terrorist financing, money laundering, tax evasion, corruption, fraud, and other financial crimes. Requiring the disclosure of key individuals who own or control a legal entity (i.e., the beneficial owners) helps law enforcement investigate and prosecute these crimes.
When did this requirement go into effect?
The financial requirement for financial institutions became effective May 11, 2018.
What information do I have to provide?
You are required to provide the name, address, date of birth and Social Security number (or passport number or other similar information, in the case of foreign persons) for the following individuals (i.e., the beneficial owners):
- Each individual, if any, who owns, directly or indirectly, 25 percent or more of the equity interests of the legal entity customer (e.g., each natural person that owns 25 percent or more of the shares of a corporation); and
- An individual with significant responsibility for managing the legal entity customer (e.g., a Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner, President, Vice President, or Treasurer).
The number of individuals that satisfy this definition of “beneficial owner” may vary. Under section (i), depending on the factual circumstances, up to four individuals (but as few as zero) may need to be identified. Regardless of the number of individuals identified under section (i), you must provide the identifying information of one individual under section (ii). It is possible that in some circumstances the same individual might be identified under both sections (e.g., the President of Acme, Inc. who also holds a 30% equity interest). Thus, a completed form will contain the identifying information of at least one.
Individual (under section (ii)), and up to five individuals (i.e., one individual under section (ii) and four 25 percent equity holders under section (i)).
The financial institution may also ask to see a copy of a driver’s license or other identifying document for each beneficial owner listed on this form.
Who is a Beneficial Owner?
The U.S. government regulation defines “beneficial ownership” as being made up of two roles: (1) those that have an ownership interest in a legal entity and (2) those that control a legal entity. For those people who have an ownership interest in the legal entity, Generations is required to identify and collect personal information on anyone that meets or exceeds the following ownership thresholds:
Ultimate Beneficial Owners:
A natural person having 25 percent or more of the equity interests of a legal entity; or
A natural person owning more than 10 percent if:
a. An individual, with any amount of ownership, is a non-U.S. person (i.e., a non-U.S. citizen who is not a lawful permanent resident); or
b. The entity customer or intermediary entity is formed outside of the U.S.; or
c. The entity client is a Private Investment Companies (PICs) / Personal Investment Vehicles (PIVs).
Who is a Control Individual?
A person with significant managerial control or influence over a legal entity customer (e.g., Chief Executive Officer, Chief Financial Officer, Managing Member, General Partner, etc.) For every legal entity client subject to beneficial ownership, you must identify one control person.
NOTE: It is possible that the control person may also be an ultimate beneficial owner.
What is a legal entity?
For the purposes of this form, a legal entity includes a corporation, Limited Liability Company or other entity that is created by a filing of a public document with a Secretary of State or similar office, a general partnership, and any similar business entity formed in the United States or a foreign country. Legal entity does not include sole proprietorships, unincorporated associations, or natural persons opening Accounts on their own behalf.
Do I need to provide this information if I am already a GFCU Business Member?
The Beneficial Owner and Control individual information is required when a new account is opened.
What will Generations do with this information?
Generations is required to maintain this information as part of the business account record.