Beneficial Ownership Requirements for Legal Entities: Frequently Asked Questions
What is the purpose of the Customer Due Diligence Rule and its beneficial ownership requirements?
The Rule requires financial institutions to collect ownership information about an organization prior to opening deposit, loan, or safe deposit accounts for organizations such as corporations, partnerships, and limited liability companies.
Who is a beneficial owner?
A beneficial owner is defined as:
Each individual, who, directly or indirectly, owns 25% or more of the equity interests of a legal entity customer; and single individual with significant responsibility to control, manage, or direct a legal entity customer. This includes 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), or any other individual who regularly performs similar functions. This list of positions is illustrative, not exclusive, as there is significant diversity in how legal entities are structured.
What beneficial ownership information will be collected from covered legal entities?
If you want to open an account for your organization, you or another representative must complete and sign a Certification Form on behalf of the company, that lists the following information for any persons that hold 25% or more ownership:
- Dates of Birth, and
- Social Security Number*
*In cases where an individual owner is a Foreign Individual, a Passport Number will satisfy the requirement.
In addition, the above information is also required for one person who has Significant Managerial Control for the organization. This may be the President, CEO, CFO, or any other individual who performs managing functions.
Blackhawk Bank & Trust is required to verify the information provided and asks that you supply us with copies of verifying documents, such as:
- Driver’s License
- State Issued ID
Does the Certification Form need to be completed if no individual person holds 25% or more ownership?
If there are no owners with 25% or more ownership, the Certification Form must still be completed to list the one person who has Significant Managerial Control for the organization.
It is important to note that if another entity has ownership interest in an organization, that entity’s ownership structure may result in an individual person holding 25% or more ownership.
How will this information be collected?
A Certification Form will be used to obtain the required beneficial ownership information. View a Sample Certification Form.
Who does the Rule apply to?
Any corporation, limited liability company, other entity created by the filing of a public document with a Secretary of State or similar office, a general partnership, and any similar entity formed under the laws of a foreign jurisdiction that opens an account. The definition also includes limited partnerships, business trusts that are created by a filing with a state office, and any other entity created in this manner.
Does the Rule apply to existing accounts?
The rule does not apply to existing accounts that were opened before May 11, 2018.
Will information need to be provided if our organization opens additional accounts in the future?
Yes, Blackhawk Bank & Trust is mandated to satisfy the requirements of the Certification of Beneficial Owners each time a deposit, loan, or safe deposit account is opened for an organization.
Are any legal entities exempt from the Rule?
Sole proprietors, unincorporated associations, natural persons opening accounts on their own behalf and certain trusts are exempt. Also exempt are Federal or State Regulated Financial Institutions, Investment Companies and Advisers Registered with the SEC, Public Accounting Firms Registered under Section 102 of the Sarbanes-Oxley Act, State Regulated Insurance Companies, Governmental Departments or Agencies of the United States, Entities Established by US or State Law, Publicly Traded Companies Listed on a Major Exchange and their Subsidiaries, Trusts (with the exception of Statutory Trusts), Charities*, Non-Profits*
Which financial institutions are required to collect this information?
Banks, Credit Unions, and Savings Associations are all required to comply with the regulations requiring Certification of Beneficial Owners.
If you have any further questions, don’t hesitate to contact us!