Beneficial Ownership Rule Implementation Date Approaching
Beginning on May 11, 2018, all banks, savings associations and credit unions will be subject to the new beneficial ownership rule under the Bank Secrecy Act, intended to assist the government and law enforcement in the ongoing fight against money laundering and the financing of terrorism.
When an account is opened on behalf of a business or covered “legal entity,” all banks in the United States will be required to ask for certain identifying information (name, address, date of birth, social security number) of the “beneficial owners” of the business. The rule defines a beneficial owner as:
- Each individual that has 25 percent or more of the equity interest in the business; and
- One individual that has the authority to exercise control of the legal entity (such as a CEO, executive officer or treasurer).
As a company, partnership or organization opens new loan and deposit accounts, or makes changes to existing business accounts, business customers will be required to provide this documentation and certify that the information is true and accurate to the best of the customers’ knowledge. On behalf of the banking industry, the VBA sent out this press release to all of our media contacts, with the goal of educating the press and business customers on what they can expect in regard to new business account opening procedures after the rule goes into effect.
The VBA has also prepared a list of resources on this topic, including a new article from ABA Bank Compliance magazine, which covers key questions about documenting beneficial owners of accounts and FinCEN’s new set of FAQs. View those resources here, along with other resources the VBA provides on key industry trends.