Who does the Beneficial Ownership rule apply to?

All new legal entity (commercial) customers and their beneficial owners.

The definition of “beneficial owner” has two components or “prongs” and can be applied on an either/or basis:

  • Ownership prong: Each individual, if any, who owns, directly or indirectly, 25 percent or more of the equity interests of the legal entity. Note: In certain situations, the bank may obtain BOI at lower equity thresholds.
  • Control prong: An individual with significant responsibility to control, manage or direct a legal entity customer, such as an executive officer, senior manager or individual who performs similar functions.

Note: FinCEN recognizes that FIs lack an ability to verify the status of an individual as a beneficial owner. As such, FIs are permitted to rely on customer representations and certification to determine the beneficial owners of a legal entity customer.

 

Existing Customer Requirements

  • FIs are not required to retroactively obtain BOI for existing customers.
  • Existing customers are subject to the requirements only upon certain “trigger” events. A trigger event includes:
    • Opening a new account;
    • A previously exempt legal entity is no longer exempt;
    • The bank has reasonable belief that the legal entity ownership has changed; and
    • The customer residual AML risk is assessed during certain BSA/AML monitoring activities.