In May 2016, the U.S. government passed a new regulation that will require all financial institutions to collect information regarding the beneficial owners of legal entity customers. These rules will aid the government in the fight against crimes to evade financial measures designed to combat terrorism and other national security threats.
In compliance with this new regulation, Citizens Business Bank will collect beneficial ownership from legal entity customers beginning in the second quarter of 2018. Each time an account is opened for a covered legal entity, we will request identifying information (name, address, date of birth, social security number), as well as identification documentation for each individual who directly or indirectly owns 25% or more of the equity interests of a legal entity customer and a single individual with significant responsibility to control, manage, or direct a legal entity customer; or any other individual who regularly performs similar functions. This information will be requested whether or not the individuals have a personal relationship with Citizens Business Bank. This information will also be required for existing legal entity customers who establish accounts once Citizens Business Bank implements the new regulation during the second quarter of 2018 and may also be requested from existing customers. We understand that the information requested is personal and sensitive in nature; however, we must obtain the information in order to comply with this law. The information will be stored securely and safeguarded using the same standards of privacy that we maintain for all customer information.
What you need to know about beneficial ownership
The new regulation affects all legal entities, unless specifically excluded, that open or maintain accounts at any financial institution.
The person opening an account for a legal entity customer will be required to sign a certification attesting to the identities of beneficial owners that directly or indirectly own 25% or more of the equity interests of the legal entity and one controlling person (e.g., a Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner, President, Vice President, or Treasurer).
Frequently Asked Questions
What is the beneficial ownership regulation and why was it passed?
The beneficial ownership regulation is found in the United States Code of Federal Regulations at 31 CFR §1010.230. The regulation requires covered 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. Financial institutions may also request this information under other circumstances in order to maintain current information on beneficial owners. The regulation is intended to help the government in the fight against financial crimes, terrorism and other national security threats.
What types of financial institutions are covered by the regulation?
Federally insured banks and credit unions, brokers or dealers in securities, mutual funds and futures commission merchants; and introducing brokers in commodities are required to comply with the regulation.
What constitutes beneficial ownership?
Each individual, if any, who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, owns 25 percent or more of the equity interests of a legal entity customer; 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.
Note: Every legal entity must identify one control person. It is possible that the control person may also qualify under the ownership prong due to having an ownership interest.
What if the individuals who are beneficial owners and the control person are not customers of Citizens Business Bank? Is the bank still required to collect their information?
Yes. The regulation requires covered financial institutions to collect information on beneficial owners regardless of whether or not they are customers of the financial institution.
Am I required to provide information on beneficial owners and a control person for my existing accounts?
The regulation does not affect your existing accounts; however, you may be asked to provide this information to update your account file at our discretion.
When and how will I be requested to provide information on beneficial owners and a control person?
Each time you open a new account, you will be provided a Certification of Beneficial Owners form. By completing the form, you are attesting that the information provided is accurate to the best of your knowledge.
The Certification of Beneficial Owners form indicates that an unexpired government-issued identification must be provided for each beneficial owner and control person when I provide the form to Citizens Business Bank. What types of identification are acceptable?
The following types of unexpired identification are acceptable:
California Driver’s License
California Identification Card
Armed Forced or Other Gov’t Agency Identification Card
Out of State Driver’s License
Permanent Resident Card
Where will beneficial ownership data be stored?
Citizens Business Bank will maintain beneficial ownership information in its system of record. The data will be subjected to strict privacy policies and procedures and will not be shared.
Will beneficial ownership information be used for any marketing purposes?
No. The information will only be collected and maintained to comply with the regulation and will not be used for marketing purposes.