Beneficial Owner Final Rule
Priority Payment Systems and its clients are required to enhance its policies and boarding processes to comply with the Beneficial Owner Final Rule requirement by May 11, 2018.
The U.S Financial Crimes Enforcement Network (FinCEN) published its Customer Due Diligence Requirements for Financial Institutions and previously communicated this May 11, 2016. It established new requirements to identify and verify the identity of beneficial owners of legal entity customers (a.k.a. the “Beneficial Owner Final Rule”.)
This new rule requires individuals who own (directly or indirectly) 25% or more of equity interest of a business to provide their personal information on the business’ payment processing application. It is important to note that those who own 25% or more do not all have to sign the application.
Please note that the new Beneficial Ownership rule does not replace or change any of the current rules for Know Your Customer, Customer Identification or Anti-Money Laundering programs, and was created to further re-enforce these safeguards.
WHAT DOES THIS MEAN?
This is based on the Customer Due Diligence Requirement for Financial Institutions to mitigate financial crimes by identifying all ownership (direct or indirect) 25% or more. The key focus is on gathering the proper ownership information of an entity that completes a Merchant Processing Application.
While Beneficial Ownership is the most significant change to the Bank Security Act since the Patriot Act, the purpose of the rule is quite simple- it exists to help financial businesses, such as ours, understand the nature of our customer relationship while conducting on going monitoring to maintain and update information.
WHAT SHOULD YOU DO?
Per the Beneficial Ownership rules that state the following:
- Ownership: All individuals who directly or indirectly own 25% or greater equity interest of the Merchant business (legal entity) establishing the merchant processing account must be captured on the merchant application.
- Control Prong: Any individual with authorization to manage the merchant processing account (i.e. executive or senior officer) must be captured on the merchant agreement. A Control Prong may or may not have an ownership percentage in the legal entity.
- Due Diligence: We will be required to capture and verify the following information for Ownership and Controlling individuals where applicable on new Merchant accounts:
- Legal Name
- Date of Birth
- Address (Residential or Business Street Address)
- Social Security Number (SSN)
- Percent of Ownership
WHAT ARE WE DOING?
For the MXA/Wells and Synovus Platform:
We will not update the Wells/Synovus merchant application at this time; instead, we will add a check box to MXA to indicate when there are more than two owners with 25% or more equity interest in the business and to identify the control prong; and utilize a one-page form to account for the additional owners. Effective May 11, 2018, you’ll be required to submit the attached form with your merchant application, when you need to account for more than two owners.
For clients who utilize the MX Invite Code feature, the merchant will be asked to identify any additional owners and you will be required to submit the attached form in order to get the application approved.
For questions regarding Beneficial Owner Rule, please email firstname.lastname@example.org or call (877) 515-6464.