New Beneficial Ownership Requirements for Business Customers
At Capital City Bank, our mission is to improve your financial success and well being, and we strive to make our processes as simple as possible for our customers while fully complying with legal requirements.
Effective May 11, 2018, all banks are subject to a new requirement under the Bank Secrecy Act imposed by the United States Treasury Department. Under the new rules, financial institutions are required to identify and verify the beneficial owners of all legal entity customers before a new business account or loan may be established.
Each time a business account is opened or modified, we are required to ask for identifying information for each individual who has beneficial ownership (25% or more) and one individual who has significant managerial control of the business.
If you are opening an account on behalf of a business, you will also be required to provide appropriate documentation and to certify that the ownership information is accurate to the best of your knowledge.
Why the new law?
One of the main reasons for this regulation is that legal entities can be used to disguise involvement in various criminal activities including terrorist financing, money laundering, tax evasion, corruption, fraud, and other financial crimes. The federal government believes the information provided will assist law enforcement in combating these crimes, and will aid in the fight against terrorism and other national security threats. The regulation is aimed at making financial institutions safer and protecting the country's financial system.
What types of accounts are included?
The regulation applies to business accounts such as checking, savings, certificates of deposit, and loans held at banks, credit unions, investment firms, and other financial services providers.
Does this law affect existing accounts?
No, it does not apply to accounts opened prior to May 11, 2018. However, if you open an additional account, modify signers on an existing account, renew a Certificate of Deposit, or add a service to your account after May 11, 2018, at Capital City Bank, ownership information must be provided.
Does this just need to be done once?
No, it is required every time another new account is opened or an existing account is modified. The regulation applies to business accounts such as checking, savings, certificates of deposit, and loans. An account also includes a relationship established to provide a safe deposit box.
What businesses are affected?
The rule applies to legal-entity businesses such as a corporation, limited liability company, general partnership, or other entity created by a filing of a public document with a Secretary of State or similar office.
What businesses are exempt from the requirements?
These businesses are generally exempt:
- Sole Proprietorships
- Trusts and estates
- U.S. and state government entities
- Registered insurance companies and subsidiaries
- Charities and non-profit entities
- Unincorporated associations, such as youth sport leagues
Who is required to provide information?
Each time an account is opened or modified, we are required to ask you for the identifying information, as well as identification documents for the following individuals:
- Beneficial owner: Each individual, if any, who directly or indirectly owns 25% or more of the equity interests of the legal entity customer (e.g., each natural person that owns 25% or more of the shares of the corporation). Depending on the facts, up to four individuals may need to be identified; and
- Control Person: An individual with significant responsibility for managing the Legal Entity customer (e.g., Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner, President, Vice President, or Treasurer).
This information must be collected whether or not the individuals are bank clients.
What information must be provided?
- Legal name
- Address of primary residence (not a P.O. Box)
- Date of birth
- Social Security Number (or other similar information in the case of non-US persons
- Issuer, date of issuance, and date of expiration of identification
The identification and verification procedures for beneficial owners are very similar to those currently required for individuals opening personal accounts. While we understand the information requested is personal and sensitive, we must obtain this information in order to comply with the law.
For more information related to this new regulatory requirement, you may contact your banking representative.