What is Beneficial Ownership?
Beneficial ownership is a term in domestic and international commercial law that refers to anyone who enjoys the benefits of ownership of a security or property, without being on the record as being the owner.
Important Definitions for Businesses:
- Beneficial Owner
Each individual with 25% or more equity interest in the legal entity, whether directly or indirectly.
- Control Person
Single individual with significant responsibility to control, manage, or direct a legal entity customer (e.g. executive officer or senior manager).
- Natural Authorized Person (NAP)
An individual authorized to open accounts or provide information on behalf of the legal entity.
- Legal Entity
- Limited liability company
- Other entity created by filing a public document with a Secretary of State or similar office
- General partnership
- Any similar entity formed under the laws of a foreign jurisdiction that opens an account
- A legal entity does not include:
- Sole proprietorships or unincorporated associations.
New Regulation Regarding Legal Entity Customers:
When you open a new account, apply for a new loan, or update information on a current account on or after May 11, 2018, you will be required to provide information about your beneficial owners.
Beneficial Ownership has two parts:
- Part One: Each individual who owns 25% or more of the legal entity.
- Part Two: One individual who has significant managerial responsibility for the legal entity.
Information you will need to provide:
- Date of Birth
Acceptable Forms of Identification:
- Driver’s License
- State Identification Card
- Resident Alien Card
Why we are required to collect this information:
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.
Section 326 of the USA PATRIOT Act requires that financial institutions identify and verify the identity of beneficial owners of all legal entity customers at the time a new account is opened. The identification and verification procedures for beneficial owners are very similar to those you currently follow as individual customers.
When you open an account, we will ask you to identify the beneficial owners of your company. You will need to provide the following for each beneficial owner: Name, Address, Date of Birth and SSN. We will also need a driver’s license or another acceptable form of ID for each beneficial owner.