(a) In general. Covered
financial institutions are required to establish and maintain written
procedures that are reasonably designed to identify and verify beneficial
owners of legal entity customers and to include such procedures in
their anti-money laundering compliance program required under 31 U.S.C.
5318(h) and its implementing regulations.
(b) Identification and verification. With respect
to legal entity customers, the covered financial institution’s customer
due diligence procedures shall enable the institution to:
(1) Identify the beneficial owner(s)
of each legal entity customer at the time a new account is opened,
unless the customer is otherwise excluded pursuant to paragraph (e)
of this section or the account is exempted pursuant to paragraph (h)
of this section. A covered financial institution may accomplish this
either by obtaining a certification in the form of appendix A of this
section from the individual opening the account on behalf of the legal
entity customer, or by obtaining from the individual the information
required by the form by another means, provided the individual certifies,
to the best of the individual’s knowledge, the accuracy of the information;
and
(2) Verify the identity of each
beneficial owner identified to the covered financial institution,
according to risk-based procedures to the extent reasonable and practicable.
At a minimum, these procedures must contain the elements required
for verifying the identity of customers that are individuals under
section 1020.220(a)(2) of this chapter (for banks); section 1023.220(a)(2)
of this chapter (for brokers or dealers in securities); section 1024.220(a)(2)
of this chapter (for mutual funds); or section 1026.220(a)(2) of this
chapter (for futures commission merchants or introducing brokers in
commodities); provided, that in the case of documentary verification,
the financial institution may use photocopies or other reproductions
of the documents listed in paragraph (a)(2)(ii)(A)(1) of section
1020.220 of this chapter (for banks); section 1023.220 of this chapter
(for brokers or dealers in securities); section 1024.220 of this chapter
(for mutual funds); or section 1026.220 of this chapter (for futures
commission merchants or introducing brokers in commodities). A covered
financial institution may rely on the information supplied by the
legal entity customer regarding the identity of its beneficial owner
or owners, provided that it has no knowledge of facts that would reasonably
call into question the reliability of such information.
(c) Account. For purposes of this
section, account has the meaning set forth in section 1020.100(a)
of this chapter (for banks); section 1023.100(a) of this chapter (for
brokers or dealers in securities); section 1024.100(a) of this chapter
(for mutual funds); and section 1026.100(a) of this chapter (for futures
commission merchants or introducing brokers in commodities).
(d)
Beneficial owner. * For purposes
of this section,
beneficial owner means each of the following:
(1) Each
individual, if any, who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, owns 25 percent
or more of the equity interests of a legal entity customer; and
(2) A single individual with significant
responsibility to control, manage, or direct a legal entity customer,
including:
(i) An
executive officer or senior manager (e.g., a Chief Executive Officer,
Chief Financial Officer, Chief Operating Officer, Managing Member,
General Partner, President, Vice President, or Treasurer); or
(ii) Any other individual who regularly
performs similar functions.
(3) If a trust owns directly or indirectly,
through any contract, arrangement, understanding, relationship or
otherwise, 25 percent or more of the equity interests of a legal entity
customer, the beneficial owner for purposes of paragraph (d)(1) of
this section shall mean the trustee. If an entity listed in paragraph
(e)(2) of this section owns directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, 25 percent
or more of the equity interests of a legal entity customer, no individual
need be identified for purposes of paragraph (d)(1) of this section
with respect to that entity’s interests.
(e) Legal entity customer. For the purposes
of this section:
(1) Legal entity customer means a corporation, limited liability
company, or other entity that is created by the filing of a public
document with a Secretary of State or similar office, a general partnership,
and any similar entity formed under the laws of a foreign jurisdiction
that opens an account.
(2) Legal
entity customer does not include:
(i) A financial institution regulated
by a Federal functional regulator or a bank regulated by a State bank
regulator;
(ii) A person described
in section 1020.315(b)(2) through (5) of this chapter;
(iii) 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;
(iv) An investment company, as
defined in section 3 of the Investment Company Act of 1940, that is
registered with the Securities and Exchange Commission under that
Act;
(v) An investment adviser,
as defined in section 202(a)(11) of the Investment Advisers Act of
1940, that is registered with the Securities and Exchange Commission
under that Act;
(vi) An exchange
or clearing agency, as defined in section 3 of the Securities Exchange
Act of 1934, that is registered under section 6 or 17A of that Act;
(vii) Any other entity registered
with the Securities and Exchange Commission under the Securities Exchange
Act of 1934;
(viii) 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 Commodity Futures Trading Commission;
(ix) A public accounting firm registered
under section 102 of the Sarbanes-Oxley Act;
(x) A bank holding company, as defined
in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841)
or savings and loan holding company, as defined in section 10(n) of
the Home Owners’ Loan Act (12 U.S.C 1467a(n));
(xi) A pooled investment vehicle that
is operated or advised by a financial institution excluded under paragraph
(e)(2) of this section;
(xii)
An insurance company that is regulated by a State;
(xiii) 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;
(xiv) A foreign financial institution
established in a jurisdiction where the regulator of such institution
maintains beneficial ownership information regarding such institution;
(xv) A non-U.S. governmental department,
agency or political subdivision that engages only in governmental
rather than commercial activities; and
(xvi) Any legal entity only to the extent
that it opens a private banking account subject to section 1010.620
of this chapter.
(3)
The following legal entity customers are subject only to the control
prong of the beneficial ownership requirement:
(i) A pooled investment vehicle that
is operated or advised by a financial institution not excluded under
paragraph (e)(2) of this section; and
(ii) Any legal entity that is established
as a nonprofit corporation or similar entity and has filed its organizational
documents with the appropriate State authority as necessary.
(f) Covered financial institution. For the purposes of this section, covered financial institution has the meaning set forth in section 1010.605(e)(1) of this chapter.
(g) New account. For the purposes
of this section, new account means each account opened at a
covered financial institution by a legal entity customer on or after
the applicability date.
(h) Exemptions.
(1) Covered financial
institutions are exempt from the requirements to identify and verify
the identity of the beneficial owner(s) set forth in paragraphs (a)
and (b)(1) and (2) of this section only to the extent the financial
institution opens an account for a legal entity customer that is:
(i) At the point-of-sale
to provide credit products, including commercial private label credit
cards, solely for the purchase of retail goods and/or services at
these retailers, up to a limit of $50,000;
(ii) To finance the purchase of postage
and for which payments are remitted directly by the financial institution
to the provider of the postage products;
(iii) To finance insurance premiums
and for which payments are remitted directly by the financial institution
to the insurance provider or broker;
(iv) 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.
(2) Limitations
on exemptions.
(i) The exemptions identified in paragraphs (h)(1)(ii) through (iv)
of this section do not apply to transaction accounts through which
a legal entity customer can make payments to, or receive payments
from, third parties.
(ii) If
there is the possibility of a cash refund on the account activity
identified in paragraphs (h)(1)(ii) through (iv) of this section,
then beneficial ownership of the legal entity customer must be identified
and verified by the financial institution as required by this section,
either at the time of initial remittance, or at the time such refund
occurs.
(i) Recordkeeping. A covered financial institution must establish
procedures for making and maintaining a record of all information
obtained under the procedures implementing paragraph (b) of this section.
(1) Required records. At a minimum the record must include:
(i) For identification, any identifying
information obtained by the covered financial institution pursuant
to paragraph (b) of this section, including without limitation the
certification (if obtained); and
(ii) For verification, a description of any document relied on (noting
the type, any identification number, place of issuance and, if any,
date of issuance and expiration), of any non-documentary methods and
the results of any measures undertaken, and of the resolution of each
substantive discrepancy.
(2) Retention of records. A covered
financial institution must retain the records made under paragraph
(i)(1)(i) of this section for five years after the date the account
is closed, and the records made under paragraph (i)(1)(ii) of this
section for five years after the record is made.
(j) Reliance on another financial institution. A covered financial institution may rely on the performance by another
financial institution (including an affiliate) of the requirements
of this section with respect to any legal entity customer of the covered
financial institution that is opening, or has opened, an account or
has established a similar business relationship with the other financial
institution to provide or engage in services, dealings, or other financial
transactions, provided that:
(1) Such reliance is reasonable under the circumstances;
(2) The other financial institution is
subject to a rule implementing 31 U.S.C. 5318(h) and is regulated
by a Federal functional regulator; and
(3) The other financial institution enters into a contract requiring
it to certify annually to the covered financial institution that it
has implemented its anti-money laundering program, and that it will
perform (or its agent will perform) the specified requirements of
the covered financial institution’s procedures to comply with the
requirements of this section.
