Effective May 11, 2018, it is mandatory for all financial institutions to comply with new rules under the Bank Secrecy Act that will aid the government in the fight against terrorism and other national security threats. Section 326 of the USA PATRIOT Act requires that financial institutions verify the identity of the beneficial owners of all legal entities opening or maintaining an account.
Beneficial owners are identified using a two-prong test. The first is the “ownership prong,” which includes each individual who directly or indirectly owns 25 percent or more of the equity interests of a legal entity customer. The second is the “control prong,” which includes any single individual with significant responsibility to control, manage, or direct a legal entity customer. This person may be an executive officer or manager (e.g. CEO, CFO, COO, managing director, general partner, president, etc.) or any individual who regularly performs similar functions. Only one individual must be identified to satisfy the control prong and it is possible the same person may be identified under both prongs.
Chain Bridge Bank, N.A. will collect beneficial ownership information for legal entity clients who are:
- new clients applying for an account or loan;
- existing clients applying for a new account such as a deposit or loan;
- existing clients making certain changes to existing accounts as a result of ownership changes and
- existing clients experiencing significant changes to account activity such as cash or international
Please note that the list of conditions provided above is subject to change and Chain Bridge Bank, N.A. reserves the right to request beneficial ownership information for a legal entity client or prospect under other circumstances.
Chain Bridge Bank, N.A. recognizes concerns about the security and privacy of the information being collected. As such, it will treat this information with the same standards of privacy, security, and compliance as it does for all other transactions. For more information on our security and privacy practices, please click here.
To review the regulation, please visit: https://www.gpo.gov/fdsys/pkg/FR-2016-05-11/pdf/2016-10567.pdf