Effective May 11, all banks and processors are subject to new rules under the Bank Secrecy Act that have been imposed by the United States Department of Treasury. These new rules will allow law enforcement to better investigate potential involvement in money laundering, terrorist funding, tax evasion, fraud, and other financial crimes.
What this means is that every time an account is opened for a covered legal entity such as corporations, LLCs, limited partnerships, etc., we are required to ask the new merchant for identifying information (name, date of birth, address, and social security number) as well as identification documentation for:
- EACH individual that has 25% or more Beneficial Ownership in the Legal Entity AND
- ONE individual that has significant managerial control of the Legal Entity
To understand how to determine if an individual has Beneficial Ownership, we have put together this flowchart for your reference.
As you can see in the chart, once equity is broken down to the individual level, Mr. Smith, Mr. Jones, and Dr. Peter are all considered to have beneficial ownership of Merchant Prospect ABC Company.
If your client is opening an account on behalf of a Legal Entity, modifying signers on an existing account, renewing a Certificate of Deposit, or adding a service to their account, they will be required to provide the appropriate documentation and to certify that this information is true and accurate to the best of their knowledge.
Download the Newtek Beneficial Ownership Addendum form