The final rule on Customer Due Diligence Requirements for Financial Institutions requires the collection, verification and certification of Beneficial Owner information when opening a new account for Legal Entity customers. A model Certification Form was provided in the final rule to collect the beneficial ownership information. However, financial institutions have the option of using FinCEN’s Certification Form, or “obtaining from the individual the information required by the form by another means, provided the individual certifies, to the best of the individual’s knowledge, the accuracy of the information.”
You will have the flexibility to integrate the beneficial ownership information into your existing systems or processes. That means the information and Certification may be obtained electronically, without use of the Certification Form, in the same way you obtain other information from customers in connection with your current account opening procedures.
For those of you who utilize a manual, paper process, we have developed a “modified” sample Certification Form and we have added some additional, optional information you may want to consider, depending on your current process. Here’s what we’ve added:
- Account # field – Under the new rule, the beneficial ownership information is required to be retained for each “account”, not at the customer level. If you plan to use the separate Certification Form, it may be a good idea to identify the account the information is connected to.
- % of Ownership column – We added another column to the beneficial ownership information table to document the actual “percentage” of ownership. You may want to know, for due diligence purposes, if the individual owns 25% or 100%. One reason for this is for aggregation purposes. If the individual has 100% ownership in the legal entity customer, this could come into play when aggregating cash transactions for Currency Transaction Reporting. It may also come into play if you have an OFAC hit!
- Beneficial Owner Detail – We added a place to provide additional information you may want to document regarding any layers of entities that had to be drilled down through to get to an “individual” beneficial owner. (For example, ABC Co. is 50% owned by 123 Corp. 123 Corp. is 50% owned by John Doe; therefore, John is a 25% Beneficial Owner of ABC Co.)
- Beneficial Owner Verification – We created a second page to record/retain the verification methods/information used to verify the identity of the beneficial owners. Maybe you plan to obtain this on your CIP worksheet, but if you want to keep all of the beneficial ownership requirements together on one form, this would provide that option.
Our modified sample Certification Form is available under “Resources” on the Free Downloads page of our website. We hope this helps take the complication out of compliance and let’s you get back to serving your customer!
You are in luck! See our upcoming training opportunity on this subject – https://store.bankerscompliance.com/#/product/6d4b457e-2e25-4035-9bd4-33c70ab4490a?keyword=
Deb joined Banker’s Compliance Consulting with twenty years of experience in the banking industry. Her past positions include teller, credit review analyst, assistant financial officer, BSA Officer, Compliance Officer, and Director of Compliance. She has worked for both a small community bank and a large billion-dollar bank.
Deb has Associate Degrees in Business Management and Accounting. She is a graduate of the American Bankers Association National Graduate School of Compliance Management, an honors graduate of Schools of Banking Compliance School, and a graduate of Schools of Banking Advanced School of Banking. Deb’s considerable knowledge and experience make her a valuable member of the Banker’s Compliance Consulting Team. Deb is a Certified Regulatory Compliance Manager (CRCM) and a Certified Anti Money-Laundering Specialist (CAMS).
Deb loves to spend her free time cycling, running, kayaking and weight lifting with her husband. Between them, they have three adult children and six grandchildren. Other interests include anything outdoors and anything she hasn’t done or seen yet!