FDIC Regulation To Track Beneficial Owners of Business Accounts

In 2016, the Federal Deposit Insurance Corporation (FDIC) published regulations, which were authorized by the Bank Secrecy Act, to require all US Financial Institutions to obtain the identity of the beneficial owners of business accounts for a corporation, limited liability company, or other entity that is created by the filing of a public document with a Secretary of State or similar office, a general partnership, and any similar entity formed under the laws of a foreign jurisdiction. This is not personal accounts.  The procedures are to be implemented by May 11, 2018.  When a business opens a new account or changes an existing account, financial institutions will have a “control person” obtain information and sign a certification on behalf of the business.  The certification lists for all beneficial owners who have 25% or more of the equity interests in the businesses their names, addresses, dates of birth and some identifying number (Social Security, passport, driver’s license, etc.).  The control person (usually an authorized signer) is someone with significant managerial control over the business.   The regulation does not cover accounts opened and later unchanged as of May 10, 2018, single transactions, wire transfers and other exceptions.  A covered financial institution must establish procedures for making and maintaining a record of all information obtained under this procedure.  Therefore, there is no anonymity as to the beneficial owners in regard to the business’s accounts at financial institutions.