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Beneficial Ownership

Overview

In May 2016, the U.S. government passed a new regulation regarding the beneficial ownership of legal entity customers.  Starting on May 11, 2018 it will be mandatory for ALL financial institutions to comply with this regulation by identifying the ultimate beneficial owner(s) and a controlling person of a legal entity customer opening or maintaining an account.

Why the change?

New regulation under the Bank Security Act require all financial institutions to identify and verify business owners before a new account or maintenance on an existing account will be established.  This rule applies to account such as checking, savings, certificate of deposits, safe deposit boxes, and loans.

In compliance with this new regulation, United Bank of Union will collect beneficial ownership information from legal entity customers.  This means that 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.  The required identifying information includes name, address, date of birth, social security number, and other information that will help identify those individuals. This information will need to be collected whether the person is a United Bank of Union client.

While we understand the information requested is personal and sensitive, we need to obtain this information to comply with the law.  As always we will treat all information collected with the utmost care.  All information will be stored securely and handled with the same standard of privacy that we have always maintained.

Why you need to know about Beneficial Ownership?

The new regulation impacts all legal entities opening or maintaining accounts at any financial institution.

There are two prongs of the beneficial ownership sections which include:

Ownership Prong

  • A beneficial owner is an individual, if any, who, directly or indirectly, owns 25% or more of the equity interest of a legal entity customer.

Control Prong

  • A single individual with significant responsibility to control, manage, or direct a legal entity customer, including an executive officer or senior manager (i.e. CEO, CFO, COO, Managing Member, General Partner, President, Vice President, or Treasurer), or any other individual who regularly performs similar functions.

United Bank of Union will collect information regarding the ownership prong and control person of any legal entity whether or not they have a personal relationship with the financial institution.

Frequently Asked Questions

What is the beneficial ownership regulation and why does it matter?

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.

Why has United Bank of Union been asked to collect this information?

United Bank of Union, as well as ALL other financial institutions in the U.S., will be required to collect beneficial ownership information.  The U.S. government implemented the new beneficial ownership regulation to help fight financial crimes.

 Is United Bank of Union the only bank that is required to collect beneficial ownership information?

No. All financial institutions are required to comply with the new beneficial ownership regulation and will be collecting this beneficial ownership information from applicable customers.

What constitutes beneficial ownership?

The U.S. government regulation defines"beneficial ownership" as being made up of two prongs (1) Ownership Prong and (2) Control Prong.

Ownership Prong

  • A beneficial owner is an individual, if any, who, directly or indirectly, owns 25% or more of the equity interest of a legal entity customer.

Control Prong

  • A single individual with significant responsibility to control, manage, or direct a legal entity customer, including an executive officer or senior manager (i.e CEO, CFO, COO, Managing Member, General Partner, President, Vice President, or Treasurer), or any other individual who regularly performs similar functions.

For every legal entity client subject to beneficial ownership, you must identify one control person.

NOTE: It is possible that the control prong person may also be in the ownership prong.

How will the change impact my existing business account?

The change should not impact your existing accounts.  However, please be aware that your United Bank of Union representative may reach out for beneficial ownership information if the account is modified.

What if the people who have been identified as beneficial owners or control person are not clients of United Bank of Union.  Do I still need to provide their personal information to United Bank of Union?

Yes.  Regardless of customer status, information about the ultimate beneficial owners and control person must be provided in order to comply with the regulation.

What is the information you will need to provide?

The required identifying information includes name, address, date of birth, social security number, and other information that will help identify those individuals.

Acceptable forms of identification:

  • Driver's License
  • State-issued Identification Card
  • Passport
  • Alien Identification Card

United Bank of Union will request a copy of one identification form.  A photocopy will be acceptable.

What business types are affected by the new beneficial ownership regulation?

  • Corporations
    • For Profit Corporations- The entire form filled out
    • Not for Profit Corporations- Only have to fill the control prong out
      • Examples of Not for Profit Corporations:
        • Girls Scout Accounts
        • Church Accounts
  • Limited Liability Companies
  • Limited Liability Partnerships
  • Limited Liability Limited Partnerships
  • Limited Partnerships
  • General Partnerships
  • Business Trusts
  • Any other entity created by filing with a state office
  • Any similar entities formed under the laws of non-us jurisdiction

What business types are exempted by the new beneficial ownership regulation?

  • Natural person
  • Sole proprietorships
  • Unincorporated associations
  • U.S. and state government entities
  • Trusts, other than statutory trusts created by a filing with a state office
  • Federal and state regulated financial institutions (e.g. federally regulated banks, brokers, or dealers in securities, mutual funds, futures commission merchants, and introducing brokers in commodities
  • Bank and savings and loan holding companies
  • State-regulated insurance companies
  • Publicly help companies listed on the New York, American, or NASDAQ stock exchanges
  • Registered investment advisors and investment companies

What types of accounts are included in the requirement?

The rule applies to accounts such as checking, savings, certificate o deposits, safe deposit boxes, and loans.

Loans:

This will include any new, renewal or modification of loans

Certificate of Deposits:

Our business entity cd's will be single maturing only