It Just Keeps Getting Clearer As We Go Along - Beneficial Ownership

We've all hopefully been to an eye exam. I just had my appointment the other day. What a great and fun profession. You have a patient sitting there and you show them a variation of lenses and they merely tell you whether the first or second you show them is clearer. The more you proceed with the patient, the clearer things become in terms of their vision.

Well, as we know with compliance, rarely is it clear till it gets there and more often than not long after…sometimes never. Today we are still getting clarification on the TRID rules of October 1, 2015. Often the problem is you have folks writing the rules lacking real world experience in a financial institution, thus the clarification and further clarification which follows.

Lately things have been all abuzz regarding Beneficial Ownership due to its upcoming effective date of May 11, 2018. I have written a newsletter article on the subject, attended training, performed live and recorded webinar training, etc. I find that the closer we get to the date, I still see folks with good questions, some of which I will provide answers to and/or opinions herein, and some of which we will simply need further guidance on from the regulatory powers that be.

I don't want to beat the subject of Beneficial Ownership to death, but it appears folks still need some clarification. So here are a few points to ponder.

  1. Beneficial ownership does not apply to entities listed on the New York, American or NASDAQ stock exchange. Listing requires compilation of an abundance of information. So you don't have to worry about these type legal entity customers as related to Beneficial Ownership.

  2. Only the "Control Prong" of Beneficial Ownership applies to NGO's, Charities, or Religious Organization Legal Entity customers.

  3. A desktop description describing the Beneficial Ownership requirements effective May 11, 2018 is not a regulatory requirement per se, but it sure does help to have something descriptive on the desk to point to when trying to explain the data gathering and certification to a person opening a legal entity applicable account. You can write this yourself or a number of vendors will be glad to sell you a desktop description.

  4. Triggering events requiring certification is also a big deal. The only way you can succeed in terms of training on triggering events is providing examples in your training and related policies/procedures. These examples appear to include such things as loan and deposit account renewals, Bank Secrecy Act exemption reviews, and changes in legal entity resolutions/authorizations/management.

  5. Documenting the percentage of ownership for each applicable beneficial owner and documenting specifically if no individual meets the 25% criteria is a good practice to ensure and support proper recording of information.

Well, are things getting any clearer? Hopefully so, as time moves ever closer to May 11, 2018.