By
Heather Estes
02/05/2020
When it comes to fighting financial crimes like terrorist financing, money laundering and fraud, transparency often is the best weapon. That’s why the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) has established a new regulation – commonly referred to as the Beneficial Ownership Rule. It’s part of the Customer Due Diligence (CDD) requirements, which help financial organizations assess the risk of their business clients.
What does this regulation mean for financial institutions?
The new regulation means that banks, credit unions and other financial institutions must gather and verify information about the individuals who run a business before a new account can be opened – any new account, even if it’s a new account for a current customer. Essentially, Old National has to know who runs or benefits from a business before we can provide a loan, checking account or other financial services. And that’s true for all federally regulated banks or federally insured credit unions, mutual funds, brokers or dealers in securities or futures. We all must adhere to this new rule, which took effect May 11, 2018.
So what does this mean for you?
If you don’t operate or own a percentage of a company, this new rule shouldn’t affect you. In fact, it won’t affect any personal accounts.
If you open a business account, you will need to submit:
- Legal Entity Designation form (recommended for all business accounts) - This form declares your business type and will determine if it falls into the Legal Entity category, which includes corporations, limited liability companies, general partnerships and others. If your business is not considered a Legal Entity – sole proprietorships or unincorporated associations, for example – you’ll need to complete this form, but not the Beneficial Owners form.
- Beneficial Owner Certification form (required if business is a Legal Entity) - This form identifies the individuals who own or operate the business, including Beneficial Owners (those who own 25 percent or more of a business) and a Controlling Person (an individual with significant responsibility within the company).
- Copies of identification for each of the individuals listed on the Beneficial Owners form - This includes identification items such as driver’s licenses or passports. Without these required items, you will be delayed in opening your new account. Checking accounts, CDs, loans, lines of credit, credit cards – they all now require Beneficial Owner information.
Smart solutions for your business
When you're running a business, it's important to have a trusted financial partner – a team of experts who will listen and help you make informed decisions. Whether you're looking for expertise in financing future growth, processing payments, maximizing cash flow or another financial need, Old National is here to help.
Heather Estes, CPA, MSA, CRCM, is Senior Vice President and Director of Financial Intelligence of Old National Bancorp and the Bank Secrecy Act Compliance Officer for the company. She has more than 20 years of experience in banking and public accounting, including areas of regulatory compliance, mergers and acquisition, Bank Secrecy Act, Sarbanes Oxley, financial reporting, tax preparation, internal audit and loan review.
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