Beneficial Ownership


In May 2016, the Financial Crimes Enforcement Network (“FinCen”) issued a new regulation regarding the beneficial ownership of legal entity customers, most commonly referred to as the “Beneficial Ownership Rule.” Going forward, it will be mandatory for all financial institutions to comply with this regulation by identifying the beneficial owner(s) and a controlling person of all legal entity customers opening or maintaining an account.

Any time an account is opened or maintained for a legal entity, Merchants & Marine Bank 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, identification number, and other information that will help identify those individuals. This information will need to be collected whether or not the person identified is a customer of Merchants & Marine Bank.

While we understand the information requested is personal and sensitive, we need to obtain this information in order 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.

What you need to know about Beneficial Ownership

  • All legal entities are impacted by such events as opening or maintaining an account at any financial institution.
  • Legal entities will need to identify the natural persons who are beneficial owners that meet specific requirements as well as a controlling member (CEO, COO, CFO, Managing Member, President, Vice President, etc.).
  • Merchants and Marine Bank will collect the information of beneficial owners and the control person of legal entities whether or not they have a personal relationship with the financial information.

Beneficial Ownership FAQ:

Why am I being asked to provide this new information?

New rules established under the Bank Secrecy Act by FinCen have been put in place to aid the government in the fight against financial crimes by requiring all banks to identify the beneficial owners of legal entity customers. Requiring the disclosure of key individuals who own or control a legal entity helps law enforcement investigate and prosecute financial crimes.

What is a “legal entity” customer?

“Legal entity customers” include the following entities created by a filing with a state office or with a Secretary of State:

  • corporations
  • limited liability companies
  • limited partnerships
  • general partnerships
  • business trusts
  • any other entity created by a filing with a state office
  • any similar entities formed under the laws of a non-US jurisdiction

The definition of “legal entity customer” does not include:

  • sole proprietorships
  • unincorporated associations, such as a local Girl Scout troop or a neighborhood association
  • trusts, other than statutory trusts created by a filing with a state office

Who qualifies as a beneficial owner?

A “beneficial owner” includes individuals who fit within at least one of the following “prongs”:

  • Any individual who, directly or indirectly, owns 25 percent or more of the legal entity customer (The owners identified must be natural persons.);
  • One individual who has “significant responsibility to control, manage, or direct the legal entity.” (CEO, CFO, COO, President, Vice President, Treasurer, etc.)

What information will be required from beneficial owners?

The rule requires customers to provide the name, address, date of birth, and identification number such as a Social Security Number (or passport number or other similar information, in the case of foreign persons) of the beneficial owners. The information will be collected using a “Certification of Beneficial Ownership” form.

What types of accounts will be affected?

The new rules apply to all types of accounts opened by legal entity customers including checking accounts, savings accounts, loans, certificates, and safe deposit boxes.

When will legal entity customers need to provide this information?

Beneficial ownership information will need to be provided at the time a new account is opened, when any changes are made, or when select services are added to an existing account. The information must be collected before a new account is opened or changed.

Will beneficial owners need to be present at account opening?

No, this information can be provided by the person opening a new account on behalf of a legal entity. The person opening the new account will be required to complete a “Certification of Beneficial Ownership” form which is legally required. By completing the form, the person present is attesting that the information provided is accurate to the best of their knowledge.

Will beneficial ownership information be stored or shared?

Merchants & Marine Bank will maintain beneficial ownership information in its system of record. We maintain strict privacy policies and procedures. Any customer information, including beneficial ownership information, will not be shared.