Frequently Asked Questions About Beneficial Ownership
If you have questions about the new beneficial ownership requirements, you are certainly not alone. These new requirements, which begin 5/11/18, are some of the most invasive and burdensome requirements enforced by the government on financial institutions since 2001. Nonetheless, all banks and financial institutions are required to comply with this federal law to its fullest extent.
As a commercial bank, your business relationship is extremely important to us. We strive to make the business account opening process efficient and as enjoyable as possible for you, while also collecting the necessary information and documentation we need to be compliant. Please read through the FAQ’s below to help you better understand the beneficial ownership requirement and please let us know if you have any questions that we can help you with.
What is the beneficial ownership regulation?
In an effort to fight financial crime, the federal government has mandated that financial institutions 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, fraud, security threats and other financial crimes. Requiring the disclosure of key individuals who own or control a legal entity helps law enforcement prosecute these crimes. The regulation is in place to make the financial institution safer for customers and to protect the United States’ financial system.
What is a beneficial owner?
A beneficial owner is each individual, if any, who owns directly or indirectly, 25 percent or more of the equity interests of the legal entity and an individual with significant responsibility for managing the legal entity.
What is a legal entity?
Entities that are covered under the new beneficial ownership rule include, but are not limited to: Corporations, Limited Liability Companies (or other entity that is created by a filing of a public document with a Secretary of State or similar office), or General Partnerships (or any similar business entity formed in the United States or a foreign country). Covered entities do not include sole proprietorships, unincorporated associations, or individuals opening accounts on their own behalf.
Do I need to certify beneficial ownership information once?
Unfortunately, it is required for every new or renewed business account. This information must be collected on all business accounts, including: deposit accounts, loans, or safe deposit boxes opened or renewed.
Will FirstCapital Bank of Texas need to collect beneficial ownership information for all of my existing accounts?
If a maintenance event occurs, such as a Certificate of Deposit or loan account that is up for renewal, we will be required to collect beneficial ownership information. Other existing accounts should not be impacted.
Is FirstCapital Bank of Texas the only bank that is required to collect beneficial ownership information?
No. All banks and financial institutions are required, by federal law, to act in accordance with the beneficial ownership regulation.