Our Customer Identification Program
The U.S. Treasury’s Financial Crimes Enforcement Network (“FinCEN”) recently published a new rule in the Federal Register which strengthens the customer identification requirements for financial institutions in an effort to enhance financial transparency and diminish the ability of certain legal entity structures to misuse the U.S. banking system.
These FAQs provide additional information about the new Customer Due Diligence Rule (the “CDD Rule”) and our existing Customer Identification requirements.
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The final Customer Due Diligence Rule (the “CDD Rule”) can be found on the FinCen website HERE.
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The CDD Rule applies to all federally regulated banks and federally insured credit unions, mutual funds, brokers or dealers in securities, futures commission merchants, and introducing brokers in commodities.
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An individual is required to provide one form of unexpired government issued photo ID, social security number, date of birth, place of birth, occupation and physical residential address at account opening.
A business is required to provide proof of legal existence, tax identification number, information about business activity and expected transaction volumes. All signers on a business account, and guarantors on a loan, are also required to provide the individual information, as outlined in the previous bullet point.
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Going forward, expect CSB and certain other financial institutions, to request more identifying information than in the past. In addition to our existing requirements, any person opening an account or applying for a credit facility on behalf of a legal entity, will need to provide identifying information for the individual beneficial owner(s) of the entity and certify that the information is correct.
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Identifying information is likely to include name, residential address, date of birth and tax identification number for each individual who owns or controls more than a certain percentage of the legal entity.
Over time, these requirements will apply even if you are an existing customer and want to open a new account with us, change signers, modify an existing credit facility, or it may be requested of you during a normal course of business review.
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In order to comply with regulatory responsibilities, we are obliged to ensure customer identifying information is up-to-date. This includes information about the ownership and financial control of your business or organization and the personal information needed to re-verify the identity of key individuals.
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The regulations require us to regularly validate customer identifying information. In order to meet the federal requirement, we may ask customers to periodically update their information.
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The Bank is legally required to ensure it has complied with these Regulations. Ultimately, if we are unable to validate your information, we may be in breach of these regulations and may not be able to continue to act as your bank.
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Yes. The CDD Rule requires us, and all covered financial institutions, to collect information on individuals who are beneficial owners of a legal entity customer, in addition to the information we are required to collect on the customer under the Customer Identification Program (CIP) requirements.
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Beneficial owners are individuals who ultimately control a company or benefit from it. Beneficial owners are always natural persons. In cases where a company is owned by another legal entity, for example another company, the beneficial owner is the owner of the holding company.
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The Rule defines beneficial owner as each of the following:
- each individual, if any, who, directly or indirectly, owns a certain percent equity interest of a legal entity customer (i.e., the ownership prong); and
- a single individual with significant responsibility to control, manage, or direct a legal entity customer, including an executive officer or senior manager (e.g., a Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner, President, Vice President, or Treasurer); or any other individual who regularly performs similar functions (i.e., the control prong). This list of positions is illustrative, not exclusive, as there is significant diversity in how legal entities are structured.
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Knowledge of the beneficial owners of a company is important when corporate entities are established for illegal purposes, such as fraud, corruption or tax evasion. In these cases corporate vehicles can provide anonymity to the perpetrators of financial crime in their transactions or when obtaining bank accounts.
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Beneficial ownership information will be collected via CSB’s Certificate of Beneficial Owner(s) Form, which will be provided to legal entity customers at the time of any new account opening, during a period of review/change, or as requested by your Relationship Manager .
The Certification of Beneficial Owner(s) Form can also be downloaded HERE.
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No. The Rule requires financial institutions to obtain information about the beneficial owners of legal entities from the individual seeking to open a new account on behalf of the legal entity customer. This individual could, but would not necessarily, be a beneficial owner.
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Additional information about the Customer Due Diligence Rule can be found on the United States Government’s Federal Register website.
If you have additional questions that are not answered within these FAQs, please contact us at 888.418.5626 or email info@cambridgesavings.com.