Beneficial Owner of Legal Entity

Beneficial Owner of Legal Entity

The beneficial ownership rule defines the term «beneficial owner» as one of the following: In particular, if an exempt entity holds 25% or more of the capital shares of a client of a legal entity, no person needs to be identified for the purposes of ownership in relation to the interests of that exempted entity. Therefore, all clients of legal entities have a total of one to five beneficial owners – one person under control and zero to four people at the property line. Banks may rely on information provided by the customer to the legal entity regarding the identity of their beneficial owner(s), provided that they are not aware of facts that would reasonably call into question the reliability of such information.6See 31 CFR 1010.230(b)(2) Bank employees who know, suspect, or have reason to believe that shareholders are attempting to: However, depending on the circumstances, you may need to file a SAR.7 Department of the Treasury, Financial Crimes Enforcement Network (2016), «Customer Due Diligence Requirements for Financial Institutions,» Final Rules (RIN 1506-AB25), Federal Register, Vol. 81 (May 11), p. 29410. For more information on submitting SARs, see the «Overview of Suspicious Activity Reports» section on page 60 of the FFIEC BSA/AML Review Manual. a) Identify the beneficial owners of each client of a legal entity at the time of opening a new account. An institution can achieve this either by certifying on a form developed by FinCEN, or by obtaining the required information in the form in another way. FinCEN today published a Communication on the proposed rule-making to give the public the opportunity to review and comment on the proposed rule implementing the OTC`s Beneficial Ownership Information (BCC). The proposed rule would significantly improve the ability to protect the U.S. financial system from illegal use and provide important information to law enforcement and others to prevent corrupt actors, terrorists, and proliferators from hiding money or other assets in the United States. As with many rules that apply to banks, the details of the beneficial ownership rule are important.

Certain terms, including the definitions of «beneficial owner», «client of a legal entity», «new account» and «account», provide exceptions to the general requirements of the rule. In addition, FinCEN, usually itself and in related publications, deals with common scenarios, frequently asked questions and other rule-related considerations. (a) Any person, if any, who directly or indirectly owns, through a contract, agreement, agreement, relationship or otherwise, 25% or more of the interests of a client of a legal entity. This is the «point of ownership» of the rule. Also in accordance with 31 CFR 1020.220, the Bank should establish policies, procedures and processes for circumstances in which it cannot reasonably suspect that it knows the true identity of the beneficial owner(s) of a client of a legal entity. These policies, procedures and processes should describe the following: Like other customer information that a bank may collect, beneficial ownership information collected under the rule may be relevant to other regulatory requirements. These other regulatory requirements include, but are not limited to, the identification of suspicious activity and the determination of parties sanctioned by the Office of Foreign Assets Control (OFAC). Banks should define in their policies, procedures and processes how beneficial ownership information is used to meet other regulatory requirements. Legal entities, whether at home or abroad, can be used to facilitate money laundering and other crimes, as their real assets can be hidden. Banks` collection of beneficial ownership information on clients of legal entities can provide law enforcement authorities with important details about alleged criminals who use legal entity structures to hide their illegal activities and assets. Requiring customers of legal entities seeking to access banks to disclose identifying information such as the name, date of birth, and social security number of the individuals they own or control will make these businesses more transparent and therefore less attractive to criminals and those who help them.