Commercial Lending Beneficial Ownership

Overview

In May of 2016, the U.S. Government passed a new regulation regarding the beneficial ownership of legal entity customers.

Effective May 11, 2018, new Financial Crimes Enforcement Network (FinCEN) regulations (codified at 31 C.F.R. §§ 1010.230 and 1020.210(b)(5)) (the “New Regulations”) require that covered financial institutions, including banks:

  • Enhance their due diligence practices when opening new accounts for legal entity customers by obtaining and maintaining information identifying the beneficial owners of those legal entity customers, and
  • Amend their anti-money laundering (AML) program requirements related to collecting, monitoring, and maintaining this information.

By requiring identification of the individuals who own legal entity customers as well as individuals who control such legal entity customers, the New Regulations are aimed at preventing financial crimes conducted through accounts created and operated anonymously through a “straw man” or nominee. The information collected under the New Regulations will assist financial institutions in assessing risks in opening new accounts, as well as facilitate investigation of compliance with tax and other targeted FinCEN regulations.

What you need to know about Beneficial Ownership

In compliance with this regulation, Wellesley Bank will begin to collect beneficial ownership information from legal entity customers. Going forward any time an account is opened or maintained for a legal entity, we will request information that identifies the ultimate beneficial owner(s) and controlling person of the legal entity. This information will be requested for new and existing Wellesley Bank clients.

We understand this information requested is personal and sensitive in nature, and will treat all information gathered as such. All information gathered will be stored security and handled with the same standard of privacy we have always maintained.

Should you have any questions regarding Beneficial Ownership please refer to our Frequently Asked Questions below, or contact one of our Premier Bankers directly at (781)235-2550.

Frequently Asked Questions
What is the beneficial ownership regulation and its importance?

The beneficial ownership regulation is a federal law requiring all financial institutions to identify and verify the identity of the beneficial owners of legal entity customers as well as a controlling person of the legal entity anytime an account is opened or maintained. The regulation is aimed at making financial institutions safer for their customers and protecting the country’s financial system.

What is beneficial ownership?

The United States Government regulation indicates “beneficial ownership” as being made up of two roles. Those that have an ownership interest in a legal entity and those that control a legal entity. For those individuals who have an ownership interest in the legal entity, Wellesley Bank is required to identify and collect personal information on anyone that meets or exceeds the ownership thresholds. An ultimate beneficial owner is considered a natural person having 25 percent or more of the equity interests of a legal entity or a natural. A control person is an individual with significant managerial control or influence over a legal entity customer (e.g., Chief Executive Officer, Chief Financial Officer, Managing Member, General partner, etc.)

Every legal entity client subject to beneficial ownership, one control person must be identified and it is possible that the control person may also be an ultimate beneficial owner.

Why has Wellesley Bank been asked to collect this information?

Wellesley Bank along with all other financial institutions in the United States will be required to collect beneficial ownership information. The United States Government implemented the new beneficial ownership regulation to help fight financial crimes. We the Bank are doing our part in upholding the new regulation to protect the financial system.

A representative from Wellesley Bank has asked for a Certification of Beneficial Ownership. What is this and what is the purpose?

The Certification of Beneficial ownership is a legally required form that Wellesley Bank must collect from legal entity clients regarding their ultimate beneficial owners and control persons. By completing the form, you are attesting that the information provided is accurate and to the best of your knowledge.

When does the information need to be collected?

This information has to be collected every time a legal entity opens a new account – it’s not based on the legal entity being a new customer – it’s literally every time they open a new account, even if the entity has banked with the bank for 20 years.

How will the change impact existing accounts?

The change should not impact existing accounts. However Wellesley Bank may reach out for beneficial ownership information to update your account file.

Will Wellesley Bank also collect beneficial ownership information on personal accounts?

No. The Beneficial Ownership regulation only pertains to applicable legal entity accounts.