Beneficial Ownership Requirements Overview
All non-exempt business customers will be required, due to a regulatory requirement, to provide us with certain information on its Beneficial Owners, Controlling Person and Certifying Person.
This information must be provided on the Bank of the James Certification Beneficial Owner form before a new account can be opened, or a new service can be established, or otherwise in order to fulfill the bank’s request for such. Failure to complete this form when requested may result in the exiting/closing of your Bank of the James relationship.
What is this form?
To help the government fight financial crime, federal regulation requires certain financial institutions to obtain, verify, and record information about the beneficial owners of legal entity customers. Legal entities can be abused to disguise involvement in terrorist financing, money laundering, tax evasion, corruption, fraud, and other financial crimes. Requiring the disclosure of key individuals who ultimately own or control a legal entity (i.e., the beneficial owners) helps law enforcement investigate and prosecute these crimes.
Who has to complete this form?
This form must be completed and signed by the person authorized to open a new account or otherwise act on behalf of a legal entity (the Certifying Person*) with any of the following U.S. financial institutions:
- a bank or credit union
- a broker or dealer in securities
- a mutual fund
- futures commission merchant
- an introducing broker in commodities
For the purposes of this form, a legal entity includes a corporation, limited liability company, or other entity that is created by a filing of a public document with a Secretary of State or similar office, a general partnership, and any similar business entity formed in the United States or a foreign country. Legal entity does not include sole proprietorships, unincorporated associations, or natural persons opening accounts on their own behalf.
What information do I have to provide?
This form requires you to provide the name, primary residence address, date of birth and Social Security Number (as applicable) as well as the name of the issuer and number of the driver’s license or passport for the following individuals:
Beneficial Owner: Each individual, if any, who owns, directly or indirectly, 25 percent or more of the equity interests of the legal entity customer (e.g., each natural person that owns 25 percent or more of the shares of a corporation) depending on bank instruction
Controlling Person: An individual with significant responsibility for managing the legal entity customer (e.g., a Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner, President, Vice President, or Treasurer)
- If these individuals are not present at account opening, a photocopy of the presented driver’s license or passport or other identifying document for each beneficial owner must also be provided.
- The number of individuals that satisfy this definition of “beneficial owner” may vary.
- Regardless of the number of individuals identified as beneficial owners, you must provide the identifying information of one individual identified as the “controlling person”.
- It is possible that in some circumstances the same individual might be identified as both. For example, you may have the President of Acme, Inc. who also holds a 30% equity interest.
*The Certifying Person, by signing the form, will attest to the completeness and accuracy of the populated information. The Certifying Person will also be required to provide on the form his/her full name, title and date of birth, along with id. Other information may be requested as part of the bank’s standard account opening/maintenance processes.
What types of businesses are potentially exempt from these new requirements?
Business clients who fall into one of the categories below are generally exempt from these requirements. However, the Certifying Person may still be required to sign the beneficial owner form to attest to the exemption.
- Sole Proprietorships
- Unincorporated Associations (such as scout troops or youth sport leagues)
- Regulated Domestic Financial Institutions, including their holding companies. A financial institution regulated by a federal functional regulator or a bank regulated by a state bank regulator.
- U.S. & U.S. state government entities. A department or agency of the United States, or any State or of any political subdivision of a State – e.g. U.S. Department of the Treasury; State of Georgia; City of Decatur.
- U.S. publicly traded companies and subsidiaries (51% owned or greater) thereof – publicly traded companies (listed at 31 CFR 1020.315(b) (2) through (4)). U.S. publically traded companies and subsidiaries that are majority owned by these publically traded companies, e.g. Alphabet Inc. and its wholly owned subsidiary Google Inc.
- Securities and Exchange Commission (SEC) registered issuers of securities. An issuer of a class of securities registered under section 12 of the Securities Exchange Act of 1934 or that is required to file reports under section 15(d) of that Act.
- Exchanges and clearing agencies – as defined in section 3 of the Securities Exchange Act of 1934, that is registered under section 6 or 17A of that Act e.g. NY SE, NASDAQ.
- Securities and Exchange Commission (SEC) registered investment companies – as defined in Section 3 of the Investment Company Act of 1940 that is registered with the SEC under that Act.
- Securities and Exchange Commission (SEC) registered investment advisers – as defined in section 202(a) (11) of the Investment Advisers Act of 1940 that is registered with the SEC under that Act.
- CFTC-registered entities. A registered entity, commodity pool operator, commodity trading advisor, retail foreign exchange dealer, swap dealer, or major swap participant, each as defined in section 1a of the Commodity Exchange Act that is registered with the CFTC.
- Registered Public accounting firms registered under section 102 of the Sarbanes–Oxley Act. g., Deloitte, Ernst & Young.
- Trusts (non-statutory business trust). The exclusion would generally cover non-statutory, i.e., created by contract, trusts. E.g. Irrevocable trusts, generation skipping trusts, life insurance trusts; etc.
- US State registered insurance companies – g. State Farm; Geico; Cigna.
- Entity registered with the SEC – entity registered with the SEC under the Securities and Exchange Act of 1934.
- Financial Market Utility – A financial market utility designated by the Financial Stability Oversight Council under Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
- Non-US government agency engaged in US government activities only (non-commercial),g. Federal Reserve Board.
- Pooled investment vehicle operated or advised by a regulated domestic financial institution
- Any legal entity whose sole relationship with Bank of the James is to finance insurance premiums and for which payments are remitted directly by Bank of the James to the insurance provider or broker, without possibility of cash refund. Limited to clients of (a Bank of the James subsidiary) – those that have no other relationship with Bank of the James.
- Any legal entity whose sole relationship with Bank of the James is to finance the purchase or leasing of equipment and for which payments are remitted directly by the financial institution to the vendor or lessor of this equipment, without possibility of cash refund. Limited to clients of Bank of the James Leasing – those that have no other relationship with Bank of the James.
- Pooled investment vehicle NOT operated or advised by a regulated domestic financial institution
- Charities and nonprofit entities. (Only exempt from ownership prong, must have control prong)
For more information related to this new regulatory requirement, you may contact your banking representative or refer to the following: https://www.gpo.gov/fdsys/pkg/FR-2016-05-11/pdf/2016-10567.pdf