Learn about new Beneficial Ownership Requirements

Beneficial Ownership Requirements Overview

Beginning June 1, 2018, a new federal regulation takes effect. The new regulation requires all financial institutions to request more information from its business entity customers. The additional information relates to the “beneficial owners” and controlling person for the business.

California Business Bank will provide our standard Beneficial Owner Form, which must be completed before a new account can be opened or a new service can be established. If we do not receive the form when requested, this could result in the closing of your California Business Bank banking relationship.

About the Requirements

What is the Beneficial Owner form?

To help the government fight financial crime, federal regulation requires certain financial institutions to 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, corruption, fraud, and other financial crimes. Requiring the disclosure of key individuals who ultimately own or control a legal entity (i.e., the beneficial owners) helps law enforcement investigate and prosecute these crimes.

Are any businesses exempt from these new requirements?

Business clients who fall into one of the categories below are generally exempt from these requirements. There are several other categories not listed, and we will determine if your business is exempt.

  1. Sole Proprietorships.
  2. Unincorporated Associations (such as scout troops or youth sport leagues).
  3. U.S. publicly traded companies and subsidiaries (51% owned or greater).
  4. Securities and Exchange Commission (SEC) registered issuers of securities.
  5. Trusts (non-statutory business trust). However, if a trust is an owner of a business entity, the trustees must be identified.
  6. Estates.
  7. Charities. Internal Revenue Code-qualified charities and nonprofit entities in good tax-exempt standing.

About the Form

Who has to complete this form?

This form must be completed and signed by the person authorized to open a new account on behalf of a legal entity. For the purposes of this form, a legal entity includes a corporation, limited liability company, or other entity that is created by a filing of a public document with a Secretary of State or similar office, a general partnership, and any similar business entity formed in the United States or a foreign country. Legal entity does not include sole proprietorships, unincorporated associations, or natural persons opening accounts on their own behalf.

What information do I have to provide?

The form requires you to provide the name, primary residence address, date of birth and Social Security Number (as applicable) as well as the name of the issuer and number of the driver’s license or passport for the following individuals:

Beneficial Owner: Each individual, if any, who owns, directly or indirectly, either 25% or more, or 10% or more of the equity interests of the legal entity customer (e.g., each natural person that owns 25% or more, or 10% or more of the shares of a corporation) depending on bank instruction

AND

Controlling Person: An individual with significant responsibility for managing the legal entity customer (e.g., a Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner, President, Vice President, or Treasurer).

If these individuals are not present at account opening, a photocopy of the presented driver’s license or passport must also be provided.