The New Customer Due Diligence Rule - Beneficial Owners

Home Privacy & Disclosures The New Customer Due Diligence Rule - Beneficial Owners

Effective May 11, 2018

Starting May 11, 2018 all financial institutions will be required to identify and verify the identity of beneficial owners of legal entities opening an account, obtaining a loan or a safe deposit box.

What is a legal entity?

A legal entity is defined as a corporation, LLC, general partnership or other entity, that is created by the filing of a public document with the secretary of state or similar agency, that opens an account.

What is not considered a legal entity?

Sole proprietorships (DBA’s), unincorporated associations (such as Scout Troops and youth sports leagues), or natural persons opening accounts on their own behalf.

Who is a beneficial owner?

A beneficial owner is broken down into two categories

  1. Ownership Prong – each individual, if any, who, directly or indirectly, through any contract, agreement, understanding, relationship or otherwise, owns 25% or more of the equity interests of a legal entity. This could be as few as zero or as many as four.
  2. Control Prong – a single individual with significant responsibility to control, manage or direct a legal entity customer, including, for example, an executive officer or senior manager such as a president.

What does this mean for you?

The individual opening the account will need to complete a Certificate of Beneficial Ownership and provide us with the following information:

  • Name
  • Address
  • Date of Birth
  • Identifying number (social security number / passport number)
  • Copy of government issued ID

The requested information must be provided for any owners that have 25% or more in ownership in the entity (if there is one) and the single individual with significant management or control responsibility of the entity (manager).

What does it mean by signing the Certificate?

By signing the certificate you are stating that, to your best knowledge, the information being provided about beneficial owners is correct.

Why do I have to do this?

The Federal Government has issued this new regulation that all covered institutions must follow.

When do I have to do this?

Any time a new account is opened for an entity or any time it is requested by the Credit Union.

What if I say no?

The Credit Union will have to deny the account.

Is this information confidential?

Yes, all information collected and maintained on record is secure and confidential. Financial institutions adhere to strict requirements to ensure compliance with privacy and information security regulations.