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Beneficial Ownership Rule

 

Beneficial Ownership is a new rule from the Financial Crimes Enforcement Network (FinCEN), under the Bank Secrecy Act, which requires all covered financial institutions to collect and verify from certain non-exempt legal entities specific information about the beneficial owners at the time a new account is opened.  The intent of the Beneficial Ownership Rule is to protect the parties from money laundering, tax evasion, and other financial crimes. 

 

Definitions: 

Beneficial Owner

Each individual with 25% or more equity interest in the legal entity, whether directly or indirectly (for certain clients, Farmers Bank will advise if each individual with 10% or more equity interest is required).

Control Person

Single individual with significant responsibility to control, manage, or direct a legal entity customer (e.g. executive officer or senior manager).

Legal Entity

  • Corporation
  • Limited liability company
  • Partnership
  • 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.
  • Refer to the section on exclusions and exempt below for more details on whether your company is impacted by this requirement.

 

The Beneficial Owner Form


When opening an account at Farmers Bank, the Beneficial Ownership Form must be completed by the Control Person.  The form requires, among other information,  the name, business address or primary residence address, date of birth, Social Security Number (as applicable), the name of the issuing state or country, and number of the passport or driver’s license for the Beneficial Owners and Control Person as applicable.

Beneficial Ownership information is required…

  • With each account opening, or
  • If there were changes in beneficial ownership since last certifying for your organization, or
  • As may be requested by Farmers Bank.
  • Note:  After a signed form is provided to Farmers Bank for the first time, with each subsequent account opening Farmers Bank will provide a Re-Certification of Beneficial Owner(s) Form with select fields pre-populated to be confirmed.  The remainder of the form will then need to be completed and signed by a Control Person.

 Using the form

  • You can review the form at any time to become familiar with it. 
  • To complete the Beneficial Ownership Form, please save it to your computer.  It can be completed as a PDF form but must then be printed as a hard copy; the Control Person must sign in ink (“wet” signature).  The completed and signed form may be scanned and returned to the bank as directed by a Farmers Bank representative or a paper copy may be brought to all new account openings.
  • Farmers Bank will verify the information provided.

 

What entities are excluded and exempt?


Exclusions:  The following legal entities are excluded from the Beneficial Ownership Rule and do not require the collection of Beneficial Ownership information or evidence supporting their exclusion:

  • Sole Proprietorships
  • Unincorporated Associations
  • Trusts (other than statutory trusts created by a filing with a Secretary of State or similar office)
  • Authorized Users for credit cards
  • Non-Account Owners

Exemptions


Legal entities in one of the following categories are generally exempt from the Beneficial Ownership Rules requirements.  However, a completed form detailing exemption reasons and signed by the Control Person will be required with the first account opened after the FinCEN regulatory date.

  1. Entities traded on a U.S stock exchange (NYSE, American or NASDAQ)
  2. A charity or non-profit entity (requires a Control Person)
  3. Trusts (not formed through a Secretary of State filing) 
  4. A Public Accounting firm registered under section 102 of the Sarbanes-Oxley Act
  5. A Bank regulated by a U.S. state agency
  6. An Insurance company regulated by a state of the United States
  7. A U.S regulated financial institution
  8. An agency of the U.S. Federal government
  9. An agency of a U.S. State government
  10. A U.S. local government agency
  11. A non-U.S. government agency engaged in government activities
  12. A bank holding company
  13. A savings and loan holding company
  14. Equipment Finance/Leasing transactions that are purchases from third parties as Farmers Bank is not the originating bank.
  15. A financial market utility designated by the Financial Stability Oversight Council
  16. A non-U.S. entity opening a private banking account subject to 31 CFR
  17. A foreign Financial Institution established in a jurisdiction where the regulator of such institution maintains Beneficial Ownership information (requires review and approval by Farmers Bank)
  18. An issuer of a class of securities
  19. An SEC registered investment company, investment advisor, broker dealer or other registered firm with a current SEC registration number
  20. A Commodity Futures Trading Commission registered entity
  21. A pooled investment vehicle that is operated or advised by a financial institution that is exempt from Beneficial Ownership
  22. Non-excluded pooled investment vehicles - those not operated by or advised by a financial institution such as a non-US managed mutual fund, hedged fund or private equity fund (requires Control Person)
  23. An Entity, organized under the laws of the United States, with at least 51% of whose commons stock or analogous equity interest held by an entity traded on a U.S. Stock Exchange
  24. Unincorporated Associations (such as scout troops or youth sport leagues) (Unincorporated Associations are excluded and are not required to provide beneficial ownership and signature from a Control Person)

More information

For more information on this regulatory requirement and how it impacts you, please contact us, or refer to the Federal Register website or FinCEN’s FAQs Regarding Customer Due Diligence Requirements for Financial Institutions.