Reading Time: 2 minutes
While beneficial ownership rules have not changed for financial institutions in 2024, there was a change for the legal entity customers you serve. Here is what you need to know to help your clients through the new beneficial ownership rules.
Beneficial Ownership Requirements for Financial Institutions
- Written procedures must be established and maintained on how the institution will identify and verify beneficial owner(s) of legal entity customers and additional procedures must be defined for maintaining and updating customer information, including beneficial ownership, as needed.
- A legal entity customer is defined as a corporation, limited liability company, or other entity that is created by the filing of a public document with a Secretary of State or other similar office, a general partnership, and any similar entity formed under the laws of a foreign jurisdiction that opens an account.
- Beneficial Ownership Owner Prong is any individual with direct or indirect ownership of 25 percent or more of the equity interests of a legal entity customer.
- Beneficial Ownership Control Prong is a single individual with significant responsibility to control, manage or direct a legal entity customer.
- Beneficial Ownership Identification Requirements include:
- Name
- Date of Birth
- Physical Address
- Identification Number
- Identification information can be obtained by the individual opening the account on behalf of the legal entity; however, written risk-based procedures must be established for verifying the identity of each beneficial owner of a legal entity account.
- Be sure to remind your legal entity customers that the Certification of Beneficial Ownership form they complete at account opening does not satisfy the new FinCEN reporting requirements for them.
View FFIEC Memo: Beneficial Ownership Requirements for Legal Entity Customers Overview
Beneficial Ownership Requirements for Legal Entities
- Financial institutions are exempt from filing.
- If your financial institution or holding company owns other legal entities, they may not be exempt from filing. Be sure to check the exemption list provided in the FinCEN FAQs (C.2.)
- Legal entities established prior to January 1, 2024, have until January 1, 2025, to file an initial BOI report via FinCEN.
- Legal entities established between January 1, 2024 and December 31, 2024, have 90 calendar days after the company receives notice that its creation or registration is effective, or after a secretary of state or similar office provides public notice to file an initial BOI report via FinCEN.
- Legal entities established January 1, 2025, or later have 30 calendar days from actual or public notice to file an initial BOI report via FinCEN.
View FFIEC Memo: Beneficial Ownership Requirements for Legal Entity Customers Overview
For more details on beneficial ownership rules for legal entities read Pinion’s beneficial ownership FAQ or connect with a Pinion advisor.
