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Account Opening Requirements for Legal Entities
Beginning May 11, 2018, the new Beneficial Ownership Rule established by federal regulatory authorities will require all financial institutions to identify and verify the identities of the beneficial owners of legal entity customers as well as a controlling person of the legal entity. This identifying information will be required at the time of an account opening or at the time an account is maintained. This rule is aimed to help law enforcement fight financial crimes, therefore making banking safer for you and your business.
The below information details these new account opening requirements for legal entities. If you have any questions about this new rule or about what may be expected of you upon account opening, please call us at 753-1521.
What is considered a legal entity under this rule?
Under the rule, a legal entity customer is defined as:
- Limited Liability Companies
- Limited Partnerships
- General Partnerships
- Business Trusts (created by state office filing)
- Any other entity created by a state office filing, including similar entities formed under law of other countries
A Legal Entity is not a sole proprietorship, unincorporated associations, or natural persons opening accounts on their own behalf.
Who is a Beneficial Owner?
The rule defines a Beneficial Owner as each of the following:
- each individual, if any, who directly or indirectly owns 25% or more of the equity interests of the legal entity (i.e.. each natural person that owns more than 25% or more of the shares of a corporation); and
- a single individual with significant responsibility to control, manage, or direct a legal entity, including an executive officer or senior manager (examples include a chief executive officer, chief financial officer, managing member, president, general partner); 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.
Under this definition, a legal entity will have a total of between one and five beneficial owners.
What will I need to do differently when opening an account for a legal entity?
Each time a business account is opened or maintained, we will be required to ask you for identifying information (including name, residential address, date of birth, social security number) as well as identification documentation (driver's license or passport) for each individual that has beneficial ownership and one individual that has significant managerial control of the legal entity.
You will also be required to provide appropriate documentation and to sign a Certification of Beneficial Owners of Legal Entities form and certify that this information is true and accurate to the best of your knowledge.
Who can provide the Beneficial Ownership information on behalf of the legal entity?
We are required to obtain this information about the beneficial owners of a legal entity from the individual seeking to open a new account at CB&T on behalf of the legal entity customer. This individual could, but does not necessarily have to be, a Beneficial Owner. However, the individual providing the information is responsible for certifying the Certification of Beneficial Owners of Legal Entities form.
When does the Beneficial Ownership information need to be provided?
This information must be provided prior to opening all new deposit and loan accounts, for both new and existing legal entity customers. There are also certain trigger events for already existing accounts that require the collection of Beneficial Ownership data. For more information, please call us at 753-1521.
What if the Beneficial Owner is not a customer of this bank?
Information about the Beneficial Owner and the control person of the legal entity establishing the account must be provided regardless of if that individual is a personal CB&T account holder.
Will my information be kept confidential?