Enjoying Capital Lake Park, downtown Olympia.

New Business Owner Regulations

Beginning in spring 2018 banks serving business customers will be held to tighter regulation controls in order to stop terrorist activities and money laundering through U.S. based financial institutions. As part of the Bank Secrecy Act (BSA), institutions like Oly Fed will be required to expand their customer due diligence efforts. Below are some commonly asked questions and answers related to this new regulation in order to provide you with more information and details.

A new regulation in Customer Due Diligence (CDD) is coming our way … and it’s called “Beneficial Ownership”.

What is this new regulation and what exactly does it do?

What are the four key elements of this new regulation?

  1. Identify and verify the identity of customers opening accounts.
  2. Identify and verify the identity of the beneficial owners with 25 percent or more equity interest of a legal entity (business/organization).
  3. Understand the nature and purpose of customer relationships.
  4. Conduct ongoing monitoring to maintain and update customer information and to identify and report suspicious transactions.

Under this new regulation, how is a beneficial owner defined?

With respect to legal entity customers, there are two types of beneficial owners under the final rule: those who satisfy the “ownership prong” and those who satisfy the “control prong.”

  1. Ownership Prong: The term “beneficial owner” includes each individual who, directly or indirectly, owns 25 percent or more of the equity interests of the legal entity.
  2. Control Prong: The term “beneficial owner” means a single individual with significant responsibility to control, manage, or direct the legal entity (e.g., a Chief Executive Officer, Vice President, or Treasurer).
     

When will banks need to be in compliance with this new regulation?

All financial institutions are required to be in compliance with the Beneficial Ownership regulation by May 11, 2018. 

What does this new regulation mean for a business customer like me?

Each time an account is opened for a covered legal entity, we are required to ask you for identifying information (name, address, date of birth, social security number as well as identification documents) for:

If you are opening an account on behalf of a legal entity, you will be required to provide the appropriate documentation and to certify that this information is true and accurate to the best of your knowledge.

It’s important to us that our customers understand that when we begin asking more questions and requesting more documentation than we have in the past that we’re not be trying to be intrusive. We are just working hard to comply with these important new regulations for the safety and security of our country and the communities we serve.

Where can I get more information about this new Beneficial Ownership regulation?

You can gather further information and details regarding this regulation by visiting the Federal Register’s website at: The Federal Register

If have additional questions, please feel free to contact us at (360) 754-3400. Thank you for your interest regarding these important regulations.