Starting May 11, 2018, business owners are going to want to give themselves a little extra time at the bank when they open a new account.
In an effort to curb money laundering and combat terrorism and national security threats, the US Government will require all banks to follow new Customer Due Diligence Requirements under the Bank Secrecy Act. Most banks are referring to this new regulation as the “Beneficial Ownership Rule.”
Here’s how it will affect your business –
Each time an account (deposit or loan) is opened or modified (and this includes renewals) for a business or legal entity, banks will ask for additional identifying information and documentation. The identifying information will include name, address, date of birth and social security number. Who will banks require this information for?
- Each individual that has 25% or more ownership of the entity (AKA a Beneficial Owner) and
- One individual that has significant managerial control of the entity.
What types of entities does this rule affect specifically?
- Corporations
- Limited liability companies
- Entity created by a filing of a public document with a Secretary of State or similar office
- General Partnerships
- Or any similar business formed in the United States or foreign country
What types of entities does the Beneficial Ownership rule NOT affect?
- Sole Proprietorships
- Unincorporated Associations
- Natural persons opening accounts on their own behalf
When a person goes to the bank to open up an account for the types of businesses included in the Beneficial Ownership rule, they will be required to present all the identifying information listed above AND sign a form certifying the information is true and accurate to the best of their knowledge.
So if you plan to open an account for your business after May 11, be sure you’re prepared with the correct information for the beneficial owners of the business and the individual with significant managerial control. Being prepared will help make the account opening process more efficient. And if your business frequently opens or modifies new accounts or loans, it’s a good practice to make sure this information is current and available to present each time you open a new account.
Looking for more information? Check out the list of Frequently Asked Questions available from the US Treasury Department regarding the Beneficial Ownership Rules.